[EDITORIALS]Disclosing building costsDiscussions on the proposal to require apartment builders to disclose their costs is going on a strange course. The ruling Our Open Party said it had agreed with the Ministry of Construction and Transportation on Tuesday to abandon the proposal in exchange for introducing a cost-linking system for new apartment units of up to 85 square meters (850 square feet) in government-developed sites. Then civic groups criticized the ruling party for throwing out the proposal to oblige builders to reveal their costs, which was a party campaign pledge for the National Assembly elections in the middle of April. Then the ruling party said it would review this issue.
Over the last few years, the price of new apartments has surged, stimulating a rise in all apartment prices. Accordingly, the public has come to support the argument that if apartment builders were forced to disclose their costs, they would not be able to make excessive profits through setting the prices high. Then apartment price hikes would be curbed. But whether to require apartment builders to disclose their costs should not be decided in such way. The issue should be decided after analysis on whether it would contribute to the stabilization of apartment prices. The ruling party should not decide to require apartment builders to disclose their costs only because it is a campaign pledge or because civic groups and opposition parties are urging it to do so.
Some argue that disclosing costs would bring more losses than gains. The system would actually be a regulation of new apartment prices. It would lower the supply of houses by private builders in the longer run and could result in a further rise in home prices. Even if the prices of new apartments were lower with disclosure, critics say, it would result only in the transfer of profits from builders to the first buyers of the apartment units and would not cause the drop in the market prices of general apartments.
It is dangerous to make cost disclosure a political issue and leave the solution with the voters. It should be comprehensively analyzed whether it is proper to regulate new apartment prices or to require builders to disclose their cost. We need long-term stabilization of the housing market for the benefit of the national economy.