South Korea raises base apartment construction cost due to rising steel prices

South Korea's Ministry of Land, Infrastructure, and Transport announced an unscheduled adjustment to the base construction cost under the apartment price cap system. The increase, set at 0.77%, is primarily driven by a surge in steel bar prices.

The base construction cost is a key component in determining the maximum sale price for new apartments under the government's price stabilization policy. While typically adjusted twice a year, an unscheduled revision can occur if major construction material costs fluctuate by more than 15% within three months of the regular announcement.

Specifically, the price of high-strength steel bars, a critical material, rose by 18.6% by early June compared to the March regular adjustment. Following this adjustment, the base construction cost for apartments between 16-25 stories, with a floor area of 60-85 square meters, will increase from 2.22 million won to 2.237 million won per square meter.

This revised cost will be applied to apartment sales applications submitted from July 15 onwards. The final sale price will be determined by local government review committees, considering the base construction cost, land prices, and other additional expenses. The Ministry expressed hope that this adjustment would alleviate difficulties faced by the housing construction industry due to rising costs, particularly in the context of global events impacting material prices.

“

We hope this adjustment to the base construction cost will help alleviate the difficulties in the housing construction market due to soaring costs resulting from the Middle East war and other factors. We will continue to provide comprehensive support to resolve difficulties in housing supply.