The Ministry of Land, Infrastructure and Transport (MOLIT) will purchase 3,000 unsold apartments in provincial areas after completion to stabilize the construction market. The ministry announced on March 20 that it would start the purchase notice with the Korea Land & Housing Corporation (LH) from March 21. The acquired housing will be supplied as ‘conversion type steadfast leases’, where tenants can live at 90% of the market price in a lease before having the option to purchase at a low price if desired.
This policy targets unsold apartments in provincial areas, excluding the metropolitan area, and determines the purchase based on rental potential and conversion possibilities. The purchase price will be set at up to 83% of the appraised value, and a reverse auction method will be applied, purchasing sequentially from houses with the lowest selling price offers. This aims to induce self-help efforts from construction companies and stabilize the market.
The ‘conversion type steadfast lease’ allows residents to live at 90% of the market price for six years with a two-year extension option. If the tenant wishes, they can purchase the apartment at a cheaper price. If they do not wish to purchase, a new tenant will be recruited for continued utilization.
Kim Gyu-cheol, Director-General of Housing and Land Office at the MOLIT, stated, “Resolving unsold housing is essential to mitigate the contraction in the provincial construction market,” and added, “Along with the industry’s self-help efforts, the public will actively purchase high-quality housing and provide substantial benefits to housing demanders.”
Further details on the purchase notice will be available on the LH subscription plus website from March 21. Experts point out that while short-term effects on unsold housing resolution are expected, long-term policies should include supply control alongside demand-tailored strategies.