Korea Land & Housing Corporation (LH) will start purchasing unsold dwellings after completion in non-capital regions to help recover the local construction market.
The Ministry of Land, Infrastructure and Transport announced on the 28th that LH will conduct a second purchasing announcement for unsold dwellings after completion in local areas to promote local construction investments and support economic recovery.
The targets for purchase are unsold apartments after completion in all local areas except for the capital region. LH will assess the rental feasibility of the applied dwellings, the potential for future conversion to sale, and will selectively determine the purchase targets before making a final decision after verifying the price of the selected dwellings.
The purchase price will be decided based on the 'purchase ceiling price' within the 'desired selling price' proposed by the companies. Dwellings with a 'desired selling price' lower than the 'purchase ceiling price' will be purchased sequentially.
LH will raise the purchasing ceiling standards and expand the purchase volume from the current 3,000 units to 8,000 units as the local construction market has entered a severe recession, aiming to enhance policy effectiveness. After purchasing 3,000 dwellings this year, they plan to buy 5,000 dwellings next year.
In the second purchase, the purchasing ceiling standards will be raised. In the first purchasing announcement, it was set at 83% of the appraised value after a separate appraisal, but reflecting the recent surge in construction costs, it has been increased to 90% of the appraised value to encourage applications for quality dwellings with high rental utility.
Earlier, LH conducted the first purchasing announcement in March, progressing with the procedures to purchase unsold dwellings in local areas. Due to price disagreements with construction companies, only about 700 out of the planned purchase volume (3,000 dwellings) passed the review threshold.
LH will supply the purchased dwellings as 'conversion-type guaranteed rental housing'. Residents can stay at a rental price at about 90% of the market rate for six years (with an additional two years if they do not wish to convert) before being offered a cheap conversion to purchase.
Kim Gyu-cheol, director of the housing land division at the Ministry of Land, Infrastructure and Transport, said, 'This purchase will not only support liquidity in the construction industry but also smoothly provide funds to local companies, contributing to economic revitalization.' He added, 'Through rigorous screening, we will selectively purchase quality dwellings with sufficient rental demand to provide stable housing and homeownership opportunities to young people and newlywed couples in local areas without homes.'