At the beginning of the year 2008, there are many difficult for housing constructors to do business due to increase unsold apartment. There are many side-effects due to stacking of unsold apartment, so we need salvation for those definitely.
This paper suggest salvation of "ABS for unsold apartment before completion". There are described reason as below why necessity of suggesting this salvation, this salvation making it easy for financing of housing constructors and very effectively alternative salvation for cleaning stacking of unsold apartment.
There are two reason for necessity of ABS of unsold apartment.
First, feature of less liquidity for unsold apartment because of high-price real estate and feature of less comparative advantage than sold apartment make difficult to liquidate. It is necessity to ABS for overcoming those feature and commercialization.
Second, because housing constructors have many difficulty in liquidity crisis, there is a need for diversify financing. It is possible for ABS to be a good method for salvation in capital market.
But we need conditions as below for easing liquidity necessarily.
First, In policy supporting, Korea Housing Guarantee Co. Ltd or government agency as like Credit Guarantee agency need to do supporting liquidity for credit enforcement and creating cash flow.
Second, we must make condition for earlier settlement in housing market by liquidating unsold apartment for the sake of vigorous activating capital market.
ABS of unsold apartment are much more merit than default for economy subjects based on effectively alternative salvation for cleaning stacking unsold apartment and making housing constructors do ease financing.
It makes Housing constructors use cheaper financing and investors invest more stable and profitable commodity. However Housing Guarantee Agency does not make lucrative profits but make a firm standing as government agency by diversification housing finance supporting.
As a result "ABS of unsold apartment before completion" is effective required salvation for supporting liquidity to housing constructors and more expected to activate than after-made sales of housing, so it is more accelerating real asset financing. But we need more background condition like as government fiscal supporting and housing market for setting ABS of unsold apartment in market.