Advance Notice of Supply Expansion: 'Subscription Strategy' for Home Ownership

[Image source=Yonhap News]

[Asia Economy Reporter Yuri Kim] As the government announces plans to significantly expand housing supply, prospective homeowners are becoming increasingly active. This is due to a sense of urgency that applying for new apartments offered at affordable prices amid soaring housing prices is virtually the last chance to own a home.

According to industry sources on the 16th, the number of subscriptions to the essential housing subscription savings accounts has noticeably increased recently. According to the Korea Real Estate Agency's Subscription Home, as of the end of June, the total number of nationwide Housing Subscription Comprehensive Savings accounts reached 24,684,665, an increase of 179,096 from the previous month (24,505,569). In Seoul alone, the number rose by 24,529 to 6,023,124 from 5,998,595 in the previous month. The number of first-priority accounts also increased by 22,579 to 3,213,004 in one month compared to the previous month.

Competition rates have also soared. According to Yang Ji-young R&C Research Institute, the average subscription competition rate for apartments sold in Seoul from early this year to the end of June was 87.65 to 1. This is the highest figure in 20 years since subscription competition rate statistics began in 2000. The competition rate has tripled compared to last year's average of 31.67 to 1.

Strategies vary according to subscription point scores. Those with scores in the high 50s to 60s plan to actively target units before the implementation of the private land price ceiling system. Many complexes in major areas such as Seoul are rushing to sell before the grace period ends at the end of this month to avoid the price ceiling system. High scorers close to the perfect score (84 points) can choose their preferred units and expect prices to drop further after the price ceiling system is implemented, aiming for prime units later. However, the application of new standards with the price ceiling system, the review of interests among various project entities such as associations, and other factors may delay sales, which is a variable.

The younger generation is hopeful about special supply programs. They are busily checking eligibility and winning probabilities. Especially, with the government relaxing the income criteria for newlywed special supply to 130% of the average monthly urban worker income (140% for dual-income households) through the 7·10 measures, eligible real demanders are growing optimistic.

However, it is important to carefully consider that the private housing newlywed special supply criteria require ▲being a first-time homebuyer ▲limited to units priced between 600 million and 900 million KRW ▲applicable only to the general supply portion (25%) excluding the priority supply (75%) within the newlywed special supply ▲and within the general supply (25%), applicants must compete with those who missed out on priority supply (75%) and applicants with income below 120% of the average monthly urban worker income (130% for dual-income households). In cases of competition within the same rank, residents of the relevant area and the number of minor children are considered to select occupants. The first-time homebuyer special supply has expanded in scope to 15% of public land private sales but requires meeting income criteria (100% for national housing, 130% for private housing).

Meanwhile, dual-income households in their 30s and 40s with relatively low subscription points and not eligible for special supply are taking a wait-and-see approach regarding market trends such as multi-homeowners' movements following 'punitive taxation' after the 7·10 measures. Ham Young-jin, head of the Zigbang Big Data Lab, said, "Support for home purchases for first-time buyers and newlyweds in their 30s and 40s will increase, expanding opportunities for these groups to secure housing," adding, "It is necessary to check eligibility in advance by reviewing conditions."