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Gov’t to roll out price ceiling system for apartment complexes in bubble-prone areas

The Moon administration has tried a few things
to cool down Korea’s overheated housing market, and now it’s announced a big new measure a
price ceiling system for apartments. Our Hong Yoo reports. The Ministry of Land, Infrastructure and Transport
made the announcement on Monday morning following consultations between the government and ruling
party. The newly-adjusted price ceiling system on
privately-owned housing sites will be applied in October at the earliest. Currently, a price ceiling system, which decides
the parcel price of apartments by adding a basic building cost set by the government,
only applies to public housing apartments. During the Roh Moo-hyun administration in
the mid-2000s, such a system was applied to privately-owned housing sites, but it ended
up existing in name only as it was difficult to apply due to a contracting housing supply
and a deterioration in apartment quality On Monday, the government said it will be
easing some of the prerequisites in applying the new system. Currently, regions where house prices have
increased at twice the inflation rate during the previous three months have a price ceiling
imposed on them. But with the reform, regions designated as
a speculation-prone zones will be given a price ceiling automatically. The specific zones will be revealed when the
finalized legislation is ready. Currently, the government designates older
apartment blocks that are being renovated as apartments that require price ceilings
at the stage of planning for distribution and management. This means the government cannot put price
ceilings on such apartments that don’t get a cap when people start buying the apartments. But with the reform, the price ceiling can
be applied at the stage where residents are allowed to buy. To prevent side effects from the price cap
measure, such as selling the apartment after the required maximum 4 years of resale prohibition
to make capital gains, the government has expanded the prohibition period to a maximum
of 10 years. With such reforms, the government expects
to protect consumers from over-priced housing. Hong Yoo, Arirang News.

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