Sejong City apartments turn into 'jackpot' for gov't workers

Apartment buildings around the government complex in Sejong City / Korea Times file

By Yoon Ja-young

A special housing supply program for government workers relocating to Sejong City has turned into a "jackpot," guaranteeing them hundreds of millions of won in profit. Amid a backlash from other Sejong City residents who are suffering from soaring housing prices, the government is facing pressure to thoroughly overhaul the program.

The relocation of the central government to Sejong City started in 2012, aiming at promoting balanced growth between regions in the country where half of the population live in and around the capital. The prime minister's secretariat, and the finance and land ministries were among the first to relocate, and relocation is still ongoing with the small businesses ministry scheduled to move to Sejong in August.

To encourage government officials to move there and to offer a stable housing, the government introduced a special program for its employees. It made construction companies allocate a certain portion of their new apartments only for government workers who wanted to buy apartments in Sejong. Among 97,000 apartment units supplied over the past 10 years, government workers bought 26 percent as a result.

The special program wasn't considered a huge incentive back then. As the city was built hastily on agricultural land, it lacked infrastructure. Government workers who were "early settlers" in Sejong recall that they had called it "Seberia," a portmanteau of Sejong and Siberia.

"When I first moved to Naseong-dong in Sejong, there was only one small supermarket where I could go grocery shopping. I had to drive to Daejeon for medical services. We were reluctant to move to Sejong, and the special housing program was not considered a merit back then," said a government official from the Ministry of Land, Infrastructure and Transport who moved to Sejong with her husband in 2012.

Sejong apartments were not really popular, and construction companies were sometimes left with dozens of units unsold after their initial sales. Some new apartments were even sold below the original price set by the companies. A November 2014 list of apartments for sale in Sejong City shows a 96-square-meter apartment in Areum-dong offered for sale at 7 million won below the initial sales price set by the construction company.

Regardless of the housing price, the grand construction plans went on, and now Sejong City has most of the infrastructure it needs. Chungnam National University built a hospital in Sejong and the city has retail outlets such as Emart and Homeplus as well as Costco.

The ruling party's plan to complete Sejong City as an administrative capital has led to expectations that the city will be developed even further. It plans to move the National Assembly to Sejong, and this symbolic move coupled with the nationwide housing market overheating last year pulled up housing prices. Sejong apartment prices which had been stagnant until 2019 gained 42 percent last year, the highest growth nationwide. Since the government put a price cap on initial sales by construction companies, however, the special program guaranteed hundreds of millions of won right away.

A show home used by a construction company to sell apartments in Sejong City is crowded with people in this 2017 May file photo. Government workers, meanwhile, could easily purchase new apartments in Sejong through a special supply program. Yonhap

Loopholes in special supply program

While the special supply program was aimed at inducing government workers to move to Sejong, it wasn't mandatory until recently for them to actually live in the new apartments they purchased.

Some government workers thus only profited from the rising housing prices there while still residing in Seoul. This was especially so for high-ranking officials as many of them chose to keep their family and home in Seoul and commute to Sejong, for diverse reasons such as children's schools and spouses' jobs.

According to the government filing on assets of high ranking officials, Park Jin-kyu, vice minister of Industry, Trade and Energy, sold his 111-square-meter Sejong apartment for 1.29 billion won. He made around 900 million won before tax, as he bought the apartment for less than 400 million won from the construction company.

Hwang Suk-tae, deputy minister of the Living Environment Policy Office at the Ministry of Environment, also sold his 98-square-meter Sejong apartment for 1.35 billion won last year, and is estimated to have made nearly 1 billion won before tax.

Both of them sold their Sejong apartments after Cheong Wa Dae strongly recommended high ranking officials to own only one home.

The special housing supply program has also caused conflicts between generations within the government. Some ministries that were first to relocate to Sejong are not subject to the special program anymore as years have passed since they moved. Young employees hired recently by these ministries are thus not eligible for the special program, and they are having to get housing on their own in a city where housing prices have skyrocketed.

Some real estate market experts say it is time to overhaul the special supply program.

"It was introduced to provide stable housing for government workers relocating to Sejong and other rural areas, but I don't understand why they should be guaranteed to purchase homes. They can get stable housing through rental homes as well," said Kim Jun-hyung, a professor of real estate at Myongji University.

"It led inevitably to speculation as they were made to purchase homes instead of leasing them. Government workers who want to buy an apartment can use the regular subscription system just like other people."