&#91EDITORIALS&#93Rebuild apartment pricing

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&#91EDITORIALS&#93Rebuild apartment pricing

Apartment prices have rocketed again. According to the Ministry of Construction and Transportation’s report to the National Assembly, the average initial price for new apartments in the Seoul area is 9.8 million won ($8,153) per pyeong, or 3.5 square meters. This is 80 percent higher than the price in 1998, when prices were freed from controls in an effort to liven up the housing economy. The average price per pyeong for apartments in Seoul has risen to 10 million won, some apartments in the rich Gangnam area above 20 million won.
Rising prices asked by contractors are seen as the culprit of the real estate bubble. Of course, it is true that fixing housing prices goes against market principles. We cannot, however, ignore the rising housing costs.
The construction industry attributes the high prices to the high-quality materials used in building apartments and high land prices, but their explanations are not persuasive. More often than not, the prices they ask are set to be in tune with market prices, and the land costs and construction fees are adjusted accordingly.
The soaring prices have caused civic groups to demand an evaluation to set the prices at an appropriate level, but these efforts have been evaded by the construction companies. Contractors are even said to have raised prices so that they can put on a big show of lowering them to satisfy civic groups’ complaints.
Certain legislators are calling for a revision of housing laws to require the 300 biggest construction firms in each province to reveal their costs by category, such as land, material and labor costs. Should we not adjust the initial prices for new homes, the public will be more inclined to reject an unregulated market, and we will find ourselves returning to the old system of controls.
The Ministry of Construction and Transportation should not let its concerns about stemming the housing supply stop it from providing a transparent system for setting these prices. It should allow consumers to choose building materials and implement a more flexible price scheme.
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