"What Good Is a Lower Sale Price..."... When Subscription Points Are High

Seoul Small Complex 'Godeok Artes Misozium'
Winning Cutoff Score 69 Points for All Unit Sizes

Even 4-Person Households Barely Make the Winning Threshold Despite Highest Scores

[Asia Economy Reporter Lee Chun-hee] Despite the so-called 'lotto apartments' priced several hundred million won below market value being released one after another in the private land sale price ceiling system, the bar for subscription points in Seoul is rising so high that even a typical family of four finds it difficult to expect the winning cutoff line. This is because even 'solo' complexes supplied within Seoul are selecting winners around the maximum score of 69 points, which is the upper limit that a family of four can achieve under the point system. The government's artificial price regulation is causing a counterproductive effect, becoming an 'insurmountable wall' for families with one child.

According to the Korea Real Estate Board on the 30th, the winning cutoff line for 'Godeok Artes Misojium' in Sangil-dong, Gangdong-gu, which announced winners the day before, was 69 points. Although there are usually variations by area and type, all three types supplied in this complex?59㎡A, 59㎡B, and 84㎡ (exclusive area)?showed the same minimum score of 69 points.

In the current subscription point system, '69 points' is the maximum score a family of four can obtain. This score is possible only if the account holder with three dependents (20 points) achieves full marks in the no-home ownership period (32 points) and subscription account period (17 points). It is an impossible score for a family of three with a spouse and one child. Even families of four who secure 69 points face a lottery to decide the outcome if they fall on the winning cutoff line, so applying does not guarantee winning.

Industry insiders point out that considering this complex is a small-scale apartment with only 100 units, such a winning cutoff line clearly shows how high the wall in the recent subscription market has become. During the first-priority subscription process, 13,964 applicants competed for 26 units, recording the highest competition rate in Seoul's history at 537 to 1.

Earlier, at a similar time, 'Xi Rene' in Seocho-dong, Seocho-gu, also completed its subscription with an average competition rate exceeding 300 to 1, attracting 10,507 applicants for 35 units. The winning cutoff line for the popular 59㎡ type reached 64 points, the highest score achievable by a family of three.

Jiyoung Jung, CEO of iOne and a subscription expert, analyzed, "The prices of newly supplied apartments under the price ceiling system are set far below market prices, and from February next year, a residency obligation for winners will be introduced, which seems to be attracting demand." Currently, if the sale price is below 80% of the nearby area's price, a five-year residency obligation applies; if between 80% and 100%, a three-year obligation applies after completion, as per the amended Housing Act. However, a grace period is in effect until February next year.

The industry expects that as the supply of units subject to the price ceiling system increases from next year, the inflation of subscription points is likely to continue. In this process, there are concerns about a balloon effect where younger people with low points flock to the lottery-based units. Currently, in speculative overheated districts like Seoul, all small and medium-sized houses under 85㎡ are allocated by points, but for large houses over 85㎡, half are supplied by lottery, allowing those with low points or homeowners to have a chance to win.

However, due to the characteristics of the housing supply market in Seoul, where 80-90% of supply comes through reconstruction and redevelopment, the supply of large units in the general sale market is extremely limited, making the barrier to homeownership higher for subscription account holders with low points. For example, in August, among the 110 general sale units of DMC SK View I-Park Foret in Susaek-dong, Eunpyeong-gu, only 9 were large units, and the competition rate for large units soared to 1,355 to 1.