[Practical Finance] "Oh My Ju-nim"... 'Blind Subscription' Is a No-Go

[Asia Economy Reporter Yuri Kim] Despite the chaotic economic situation caused by the impact of the novel coronavirus disease (COVID-19) in the first quarter of this year, the housing pre-sale market received favorable subscription results. Although the contraction in housing transactions that began in the Gangnam area of Seoul is spreading, the subscription market remains vibrant.

Amid the global spread of the COVID-19 pandemic, 110,000 households nationwide are set to be offered for pre-sale in the second quarter. Experts advise against "blind subscriptions" and recommend carefully selecting the pre-sale units during this period. They emphasize the importance of considering individual complex transportation benefits, surrounding infrastructure, and overall supply and demand conditions when using subscription savings accounts.

◆ 110,000 households in Q2... 50,000 households waiting in April = According to Real Estate 114, the planned apartment pre-sale volume for the second quarter is 117,028 households (including rental units, based on total households). This is about a 30% increase compared to 92,775 households pre-sold during the same period last year.

Notably, nearly half of the total, 55,411 households, are expected to be released intensively this month. Following that, 36,738 households will be introduced in May, and 24,879 households in June. By region, Gyeonggi Province leads with 30,658 households, followed by ▲Incheon with 13,976 households ▲Busan with 13,137 households ▲Daegu with 11,804 households waiting to be offered. Seoul also has 10,379 households awaiting pre-sale.

◆ Seoul, Jamwon and Heukseok attract attention = In Seoul, the top subscription area, the grace period for the private land pre-sale price ceiling system was extended by three months from the end of this month to the end of July, delaying the supply of some prime complexes. However, key complexes are still rushing to pre-sell within the first half of the year, attracting interest from homebuyers. Notable locations include Sinbanpo 13th Complex in Jamwon-dong, Seocho-gu, and Heukseok 3rd District in Heukseok-dong, Dongjak-gu.

The Sinbanpo 13th Complex, a reconstruction project, is small with 330 households and only 101 units for general pre-sale, but it is expected to see fierce subscription competition as it is a prime apartment in the Gangnam area. Located just south of Hannam Bridge, it offers excellent accessibility and is near Shindong Elementary and Middle Schools, providing outstanding educational conditions. It is also directly connected to Hangang Citizen Park. Heukseok 3rd District in Heukseok New Town is also considered a semi-Gangnam level complex. Out of 1,772 households, 370 are for general pre-sale. It is close to Heukseok Station on Subway Line 9, Chung-Ang University Hospital, and Heukseok Market. Many major complexes in Heukseok New Town are already occupied, which is an advantage for living conditions.

◆ Gwangmyeong and Seongnam with excellent Seoul accessibility also in focus = In the Gyeonggi area, semi-Seoul level apartments are being introduced one after another. Representative examples include Gwangmyeong Prugio Centber in Gwangmyeong City, DMC River Park Xi in Deok-eun District, Goyang, Woori Lin 2nd Phase in Wirye New Town, and Sanseong Station Central Park Xi & Prugio in Sinheung-dong, Seongnam.

Gwangmyeong Prugio Centber, a redevelopment complex in Gwangmyeong New Town 15th District, will offer 464 units for general pre-sale out of a total of 1,335 households. It is close to Gwangmyeongsageori Station on Line 7, providing excellent access to Seoul’s Gangnam area. The Sanseong Station Central Park Xi & Prugio, redeveloping Sinheung 2nd District in Sujeong-gu, Seongnam, is a mammoth complex with 4,774 households, including 1,736 units for general pre-sale. Using Sanseong Station on Subway Line 8, it is directly connected to Jamsil.

In Songdo, Incheon, where subscription overheating has recently appeared, 1,110 units of "Hillstate Lake Songdo 3rd Phase" are preparing for pre-sale. It is accessible via Incheon Line 1 International Business District Station, and Songdo Landmark City and a waterfront lake are planned around the complex.

In the provinces, Busan and Daegu have large volumes. The Busan pre-sale market continues its heat, with Ssangyong Platinum Haeundae in Haeundae-gu recording a high average subscription competition rate of 226 to 1 last month. In the second quarter, large-scale brand apartments such as Raemian Rey County (4,470 households), Buam 1st District (2,195 households), and Daeyeon 4th District (1,374 households) will be offered. In Daegu, pre-sale volumes are prepared in Suseong-gu and Dong-gu, where subscription results were good last year.

◆ Careful selection needed... consider living conditions = The outlook for the real estate market in the second quarter is not bright. Since the government announced the December 16 measures last year, the transaction market has been shrinking, with a flood of urgent sales mainly in high-priced apartments in the Gangnam area, and concerns about real economy recession due to COVID-19 have increased, making volatility greater than ever.

Experts say that while the pre-sale market still has strengths such as preference for new apartments and prices cheaper than market value, a cold-headed approach tailored to each demander's situation is necessary. Kyunghee Yeo, Senior Researcher at Real Estate 114, said, "In the second quarter, there are many variables such as the pre-sale price ceiling system, COVID-19 spread, and economic downturn, so subscription demanders should continuously check the pre-sale schedules of their interested complexes," adding, "In provinces where the housing market atmosphere is lukewarm compared to the metropolitan area, the impact of COVID-19 spread on pre-sale will be significant." Ham Young-jin, Head of Big Data Lab at Zigbang, also emphasized, "The polarization of the subscription market is likely to intensify, so an approach prepared for this is necessary."