The basic construction cost benchmark used to calculate presale prices for apartments under South Korea's price cap system will rise more than 4% in just two months. The increase reflects higher raw material prices as well as a sharp rise in indirect construction costs tied to expanded safety spending at building sites. Prices are expected to face upward pressure not only at private apartment complexes in Seoul's three Gangnam districts and Yongsan district, where the cap applies, but also at public presale projects in the third-phase new towns. Owner-occupier buyers who do not own a home and who planned their purchases based on estimated prices announced at the pre-subscription stage will face heavier financing burdens.
The Ministry of Land, Infrastructure and Transport said on the 14th that the government will adjust the basic construction cost benchmark applied under the price cap system to 2.328 million won per square meter starting on the 15th. The figure applies to above-ground floors of homes in buildings of 16 to 25 floors with an exclusive floor area of more than 60 square meters and up to 85 square meters. That is 91,000 won, or 4.07%, higher than the 2.237 million won set in an off-cycle notice on July 15, just two months earlier. The revised benchmark applies to complexes that file for approval to recruit occupants on or after the 15th.
The basic construction cost benchmark makes up presale prices along with land costs and premiums for land and construction. The government adjusts the benchmark regularly on March 1 and Sept. 15 each year, and revises it off-cycle when prices of major construction materials surge. The most recent revision, in July, was driven by a spike in steel bar prices. After prices of high-strength steel bars jumped about 18.6% following the March notice, the ministry raised the benchmark 0.77% to 2.237 million won from 2.22 million won. With another increase of more than 4% just two months later, the benchmark is now nearly 5% higher than the March level in the span of half a year. Compared with 1.829 million won in March 2022, it has risen 499,000 won, or 27.3%, in just four and a half years.
Indirect construction costs are at the center of this increase. The ministry said indirect costs rose 59,000 won, or 9.77%, to 663,000 won per square meter from 604,000 won, pushing up total construction costs. That accounts for about 65% of the 91,000 won increase in the overall benchmark. The change reflects the "2026 Standards for Applying Indirect Construction Costs in Cost Calculation" released by the Public Procurement Service in April, in line with the government's policy of strengthening support for safety spending at every stage of construction.
The added burden is a particular concern for public presale projects heading into their main subscription rounds. Prices disclosed at the pre-subscription stage are estimates and are finalized based on the benchmark and project conditions at the time of the main subscription. If construction costs rise while a project is delayed, winners must come up with more money than expected. For a home with 110 square meters of above-ground floor area used to calculate construction costs, applying this increase alone adds 10.01 million won to that cost.
Presale price increases are already materializing in the third-phase new towns. Units of 84 square meters in the A6 block of Incheon Gyeyang, which opens its main subscription on the 17th and 18th of this month, are priced at 695 million won to 716 million won. Comparable 84-square-meter units in the A2 block of the same Gyeyang new town, which held its main subscription in October 2024, were offered at 549 million won to 584 million won — meaning presale prices have risen by nearly 150 million won in two years.
Elsewhere, the finalized price for 84A-square-meter units in the A-3 block of Namyangju Wangsuk 2 came to 732.45 million won, up 169.15 million won, or about 30%, from the estimate given at pre-subscription. Units of 84 square meters in the S-1 block of Goyang Changneung were set at 783.4 million won, 141.61 million won above the estimate. Complexes heading into main subscription rounds from here on will reflect the higher construction costs, which could widen the gap from pre-subscription estimates further.
The problem is that presale prices could keep climbing. With the war in the Middle East dragging on, the construction cost index for July stood at 138.59, up 5.8% from a year earlier and far above the 2.8% rise in consumer prices over the same period. Public construction costs could follow with a lag. That means presale prices at major public housing complexes in the third-phase new towns going on sale in the second half of this year could rise one after another.
Meanwhile, presale prices are climbing even more steeply in areas not subject to the price cap. One complex has emerged with a price approaching 3 billion won for a mid-size unit. The top presale price for an 84-square-meter unit at "The Sharp Bundang Highest," a remodeling of the Neuti Village 4 complex in Jeongja-dong, Bundang district, Seongnam, Gyeonggi Province, was set at 2.981 billion won, a new record for that unit size. That exceeds the 2.9782 billion won top price for an 84-square-meter unit at "Summit The Hill" in Heukseok-dong, Dongjak district, Seoul, in May. The Bundang complex will offer 143 of its 1,149 units in the general presale, with special supply beginning on the 21st.
