Determining the Construction Costs for Basic Type to Estimate the Sale Prices of New Multi-Family Housing Projects

Abstract

Over the past two decades, the South Korean government has been regulating the supply and prices of multi-family housing (MFH) projects to stabilize the national population. Recently, active research has been conducted on the construction costs for basic type (CCBT) calculation to formulate appropriate policies. However, related previous studies have focused on improving the predictability of the construction cost in early stages based on existing house sale prices. In contrast, the CCBT calculation approach mainly requires policy implementation in practical fields, without considering the requirements of academics. Therefore, it is necessary to academically discuss a different approach for the estimation of sale prices of new MFH in the construction stage. This study aimed to calculate the CCBT to determine the appropriate sale price for new MFH. We selected four sample projects to calculate the CCBT, and a weighted average method was applied to correct regional deviations. Case application, which is a comparison between the CCBT-based sale price and actual case-based sale price, produced cost values in the range of 98–104%, and they included additional expenses. The results of this study demonstrate an extremely high level of cost estimation accuracy according to the Association for the Advancement of Cost Engineering study. Furthermore, this study can facilitate the stabilization of national housing by determining an appropriate sale price and can contribute to cost management research conducted during the construction phase.

Keywords

• multi-family housing (MFH)
• construction costs for basic type (CCBT)
• sales price ceiling system
• residential stability
• cost management