Postponing Reconstruction... The Real Estate Market Holds Its Breath

[Image source=Yonhap News]

Expectations for Deregulation under the New Government

Projects Postponed One After Another Since Inauguration

Short-term Withdrawal of Listings Also Continues

[Asia Economy Reporter Kim Min-young] Since the inauguration of the new government, complexes postponing their reconstruction project schedules have been emerging one after another. They intend to proceed with the projects after confirming whether deregulation will be implemented. This phenomenon is clearly appearing not only in reconstruction but also across the entire real estate market.

According to the Reconstruction Preliminary Promotion Committee of Sanggye Jugong Complex 6 in Nowon-gu, Seoul, the committee sent an official letter to Nowon-gu Office on the 22nd requesting a postponement of the reconstruction appropriateness review. They asked to proceed with the procedures after the new government decides on abolishing or easing safety inspections and appropriateness reviews. The appropriateness review that this complex is facing is the final stage that determines whether reconstruction will proceed. Similarly, Dongnae Lucky Apartments in Oncheon-dong, Dongnae-gu, one of the largest reconstruction projects in Busan, also decided to delay the preliminary safety inspection procedure until after the new government’s inauguration. Although they planned to retry in early April after failing the preliminary safety inspection in November 2020, they changed their stance to proceed after May.

Some reconstruction promotion complexes are focusing on whether President-elect Yoon Seok-yeol’s pledge to exempt safety inspections for complexes over 30 years old will be implemented. Mokdong New Town Complex 9 in Sinjeong-dong, which failed the second detailed safety inspection in 2020, is uncertain about passing due to the structural stability weighting factor and is waiting for the safety inspection exemption. However, although the Presidential Transition Committee has clearly stated that it will ease the detailed safety inspection standards for reconstruction, it is reportedly reviewing not to pursue safety inspection exemptions, which may put a brake on future project progress.

In the market, there is also a mood of withdrawing listings in the short term while waiting for the new government’s inauguration. According to the real estate big data platform Asil, from the 9th to the 25th of this month, listings in Seocho-gu decreased by 2.9%, from 3,861 to 3,752. Seocho-gu has recently seen record-high transactions mainly in reconstruction areas. According to the Korea Real Estate Board, apartment prices in Seocho-gu have turned to an upward trend after 8 weeks. Listings in Yongsan-gu decreased by 1.8%, from 922 to 906. This is interpreted as homeowners withdrawing listings due to development expectations following President-elect Yoon’s announcement to relocate the presidential office to the Ministry of National Defense building in Yongsan-gu.

Recently, listings in Sunae-dong, Bundang-gu, Seongnam-si, Gyeonggi Province, where six Yangji Village complexes are promoting integrated reconstruction, decreased by 11.2%, from 268 to 238. Listings in Bundang-gu, Seongnam-si, a first-generation new town, decreased by 2.5%, from 3,385 to 3,301. The transaction freeze continues. According to the Seoul Real Estate Information Plaza, the number of apartment transactions in Seoul in March was 316, continuing the transaction drought following February’s 782. Even considering the 30-day reporting deadline for transactions, this is significantly lower than March last year (3,762 transactions).

This content was produced with the assistance of AI translation services.