HUG's Local Unsold Housing Buyback Program Achieves Only 16% of Target

The Housing and Urban Guarantee Corporation (HUG) has reported that its local unsold housing buyback program has achieved only 16% of the government's target. Despite the government raising the purchase price ceiling and relaxing support conditions, the results have fallen short of expectations.

According to data submitted to lawmaker Jeong Hee-yong of the People Power Party by HUG, as of September this year, the total number of purchase approvals under the local unsold housing buyback program stands at 972 units, which is just 16.2% of the target of 6,000 units set from the second half of last year to this year. The total approved purchase amount is 423.1 billion won.

The local unsold housing buyback program allows HUG to purchase unsold homes in local areas with a construction completion rate of over 50% under a buyback condition, thereby supporting the liquidity of construction companies. The government plans to support a total of 10,000 units from last year until 2028.

The annual purchase approval figures include 67 units in Busan last year, and 410 units in Busan, 399 units in Gwangju, and 96 units in Jeonnam this year. Although the government raised the purchase price ceiling from 50% to 60% of the sale price last December, the actual purchase performance has significantly lagged behind the target.

HUG explained that construction companies are addressing unsold inventory through discounted sales due to the burden of a one-year buyback period. The agency plans to push for the purchase of 3,000 units by the end of this year and will discuss extending the buyback period to two years with relevant authorities. However, even if all 3,000 units are purchased, it will still fall short of the 6,000-unit target for this year.

The construction industry is calling for the buyback period to be extended from one year to two years, as well as for the construction completion rate requirement for eligible homes to be lowered from the current 50% to 30%. In the past, the government applied a 30% completion rate standard for the buyback of unsold homes in 2010 and operated a two-year buyback period in 2012.

Lawmaker Jeong stated, "The fact that performance has not improved despite raising the support price indicates a disconnect between the current program structure and the field. We need to quickly reflect the voices from the field in the program by extending the buyback period and relaxing the completion rate requirements."