The standard construction cost applied to public presale housing in Seoul's Gangnam, Seocho, Songpa and Yongsan districts and in the third-phase new towns has risen more than 4% in just two months. Presale prices for both private and public apartments subject to the price cap on new homes are expected to climb as a result.
The Ministry of Land, Infrastructure and Transport (MOLIT) announced on the 15th that the standard construction cost for above-ground floors of homes in buildings of 16 to 25 stories, with floor space of more than 60 square meters and up to 85 square meters, has been set at 2.328 million won per square meter. That works out to 7.6824 million won per 3.3 square meters. The figure is 4.07% higher than the off-cycle notice issued on July 15, and applies to complexes that file for approval to recruit occupants on or after that date.
The standard construction cost is one of the core components that determine presale prices for homes under the price cap, alongside land costs, additional land costs and additional construction costs. It currently applies to some private land sites, including Seoul's three Gangnam-area districts and Yongsan District, and to housing on public land such as the third-phase new towns.
The ministry attributed the increase to stronger support for construction safety. It said that after applying the "2026 standards for indirect construction costs in cost calculation," released by the Public Procurement Service on April 16 this year under the government's policy of expanding safety investment before construction begins, indirect construction costs rose nearly 10% to 663,000 won from 604,000 won.
The standard construction cost has risen continuously since March 2022. At 1.829 million won per square meter at the time, it now stands at 2.328 million won, a 27.3% increase in a little over four years. The more construction cost increases are reflected, the higher the ceiling on presale prices rises. The increase is expected to push up prices not only at complexes subject to the cap but across the broader presale market. With higher presale prices compounded by lending restrictions, the financial burden on people buying a home to live in is also set to grow.
