[Practical Finance] Big Housing Pre-Sale Opportunities Are Pouring In

Revised Subscription System and Price Ceiling Release
Suppressed Supply Unleashed All at Once

44,227 Units for Sale in Seoul Metropolitan Area from March to May
Focus on 'Dunchon Jugong' and 'Geomam Prugio'

Schedule May Change Due to COVID-19
Be Sure to Check Cyber Model Houses Carefully

[Asia Economy Reporter Donghyun Choi] The housing pre-sale market, which took a brief pause at the beginning of the year due to the overhaul of the subscription system, is now busy preparing for spring. Due to the impact of the private land price ceiling system, the previously restrained supply is expected to be released all at once, raising the expectations of prospective applicants aiming to win. However, some complexes have postponed their originally planned schedules due to the novel coronavirus (Wuhan pneumonia), so it is essential to carefully check the sales calendar and notices for each complex. Paying close attention to one's financial capacity and subscription eligibility amid stricter loan regulations will also increase the chances of successfully securing a home during the upcoming spring sales season.

◆44,000 units... The largest supply in five years floods the Seoul metropolitan area spring sales= According to industry sources on the 10th, a total of 44,227 apartment units will be offered for sale this spring (March to May) in Seoul and the surrounding metropolitan area. This represents a 75.2% increase compared to the same period last year (25,356 units), marking the largest scale in the past five years. The spring sales market is expected to offer more opportunities for applicants to win due to reasons such as the carryover of last year's supply caused by redevelopment project regulations, unresolved January supply due to the subscription system overhaul, and concentration of supply before the application of the price ceiling system at the end of April.

A key complex to watch is the Dunchon-dong Jugong Apartments in Gangdong-gu, Seoul, considered the biggest highlight of this year's sales market. Out of a total of 12,032 units, 4,786 will be offered to the general public. The Dunchon Jugong is planning to launch sales around April once negotiations on prices with the Housing and Urban Guarantee Corporation (HUG) are finalized. The expected sale price is about 26 million KRW per 3.3㎡, roughly half of the surrounding market price (45 to 50 million KRW). However, since there are no units over 85㎡ (exclusive area) allocated by lottery, competition based on subscription points is expected to be fierce.

The most notable complex in Incheon is 'Geomam Station Royal Park City Prugio' located in Baekseok-dong, Seo-gu. Approximately 4,805 units will be offered to the general public around May. Over 90% of the units are small to medium-sized, including 59㎡, 74㎡, and 84㎡, with some 101㎡ and 152㎡ units allocated by lottery. This complex will feature a 21,200㎡ multi-sports center including a swimming pool, Korea's first dedicated skin diving pool, gymnasium, and climbing practice area. The complex will be developed as a comprehensive resort with facilities such as a movie theater, karaoke rooms, music practice rooms, banquet halls, and a sky lounge.

In the Gyeonggi Province area, 'Jeil Punggyeongchae' in Okjeong New Town, Yangju City, is attracting attention. Comprising 2,474 units ranging from 74 to 101㎡, it is the largest in Okjeong New Town and is expected to become the leading apartment complex in the area. Sales are scheduled for March. Other large complexes awaiting sales in the metropolitan area include 'Jeil Punggyeongchae' (1,926 units) in Paju Unjeong 3 District, Sinheung 2 District (1,962 units) in Sinheung-dong, Seongnam City, Wondong (2,345 units) in Osan City, and 'Healthstate Lake Songdo Phase 3' (1,110 units) in Songdo International City, Yeonsu-gu, Incheon.

Due to the impact of the novel coronavirus, some complexes have postponed sales schedules or are not opening model houses. The 9th complex in Magok District, which was highly anticipated as the last remaining sales complex, planned to announce resident recruitment on the 5th but canceled it. The developer, Seoul Housing and Communities Corporation (SH Corporation), will adjust the sales timing while monitoring the spread of the virus. It is likely to be supplied at the end of this month or in March. 'Wirye New Town Jungheung S-Class' in Hakam-dong, Hanam City, Gyeonggi Province, scheduled for sales this month, will open a cyber model house online instead of a physical one, allowing prospective buyers to check the exterior and floor plans. Daewoo Construction and SK Construction will also disclose detailed information about 'Maegyo Station Prugio SK View' in Maegyo-dong, Suwon City, Gyeonggi Province, through an online homepage starting on the 14th instead of opening an offline model house. GS Construction will replace the model house for 'Gwacheon Jade Xi' in Galhyeon-dong, Gwacheon City, Gyeonggi Province, with an online version.

◆Low-score applicants, wait for non-priority subscriptions= Even if you failed to win in the first-priority subscription or do not have a subscription savings account and could only watch others' home purchases, there is still a way to secure a new home. The non-priority subscription, popularly known as 'Jupjup' (picking up), has been gaining great popularity since the beginning of the year. Anyone aged 19 or older can apply without special eligibility restrictions such as holding a subscription savings account or being homeless. On the 4th, the non-priority subscription for 'Hillstate Prugio Suwon' in Gyodong, Paldal-gu, Suwon City, Gyeonggi Province, attracted over 100,000 applicants, causing the website to crash due to its popularity. Last month, 'Bupyeong Doosan We've The Park' in Sangok-dong, Bupyeong-gu, Incheon, recorded a record competition ratio of 11,907 to 1 with 47,626 applicants for 4 units. For complexes in speculative overheated zones or subscription adjustment areas, if more than 20 units remain unsold or uncontracted, a mandatory post or pre non-priority subscription must be conducted on the Korea Real Estate Agency's 'Subscription Home' platform; in other areas, it is optional. If the unsold units are fewer than 20, sales are usually accepted through the construction company's own website. Since it is difficult to track daily schedules for complexes nationwide, information is mainly shared through online cafes and KakaoTalk open chat rooms.

It is also good to aim for pre-sale rights and sale rights. Especially in the first half of this year, the resale restrictions on pre-sale rights will be lifted for 10 apartment complexes entering Seoul. These include 'e-Pyeonhansesang Songpa Park Central' in Geoyeo-dong, Songpa-gu; 'Dangsan Central I-Park' in Dangsan-dong, Yeongdeungpo-gu; 'DMC Lotte Castle The First' in Susaek-dong, Eunpyeong-gu; 'Nokbeon Station e-Pyeonhansesang Castle' in Eungam-dong, Eunpyeong-gu; and 'Baekryeonsan Haemoro' in Eungam-dong, Eunpyeong-gu. For example, the 84㎡ unit of e-Pyeonhansesang Songpa Park Central, sold in November 2017 at 810 million KRW, was traded last December at 1.21 billion KRW, 400 million KRW higher. As the price ceiling system is fully applied, the supply of new apartments will decrease, increasing their scarcity value.

Kwon Il, head of the research team at Real Estate Info, advised, "Spring sales volumes may be delayed due to the stability of the Subscription Home system and the novel coronavirus, so caution is needed. Especially for redevelopment projects, schedule changes due to the price ceiling system application and the general election are highly likely, so it is important to carefully manage subscription schedules."