The Ministry of Land, Infrastructure and Transport said it will issue an ad hoc adjustment notice on the 15th to reflect the recent rise in rebar prices in the standard construction cost applied to dwellings subject to the price ceiling on presales.
The standard construction cost is a key indicator used with land costs and additional expenses when setting the upper limit of presale prices for price-capped dwellings (dwellings in price-capped areas such as Gangnam, Seocho, Songpa, and Yongsan districts, and multifamily dwellings on public housing sites). This benchmark value is usually announced twice a year, on Mar. 1 and Sept. 15.
However, to reflect rapid changes in construction costs such as raw material prices in a timely manner, it is stipulated that an ad hoc adjustment be made if major construction material costs rise or fall by more than 15% three months after the regular notice.
This temporary adjustment is a response to the price of high-strength rebar, a core construction raw material, surging about 18.6% compared with the time of the regular notice in March. Accordingly, the standard construction cost (for 16–25 floors or lower, exclusive area 60–85 square meters, above-ground floors) will be raised about 0.77%, from 2.22 million won per square meter to 2.237 million won.
The newly revised standard is expected to apply immediately to apartment complexes that submit applications for approval to recruit occupants after this date. However, the actual presale price consumers face will add land costs and various additional expenses to the newly changed standard construction cost and will be finally approved by each local government's presale price review committee.
Jang Woo-cheol, director-general for housing policy at the Ministry of Land, Infrastructure and Transport, said, "We hope this adjustment to the standard construction cost helps ease difficulties at dwelling construction sites due to surging construction costs influenced by the Middle East war," and added, "We will continue to provide all-around support to resolve on-site dwelling supply challenges."