[Practical Finance] The Best Way to Own a Home This Year Is Still 'Winning the Cheongyak Lottery'

[Asia Economy Reporter Yuri Kim] "Winning a subscription remains the best way to secure a home this year." This year, the attention of numerous actual demanders is expected to focus on the subscription market again. The supply under the price ceiling system in the metropolitan area and the pre-subscription supply for the 3rd new towns in the second half of the year are the biggest interests for those waiting to subscribe this year. Experts advise carefully reviewing the changing subscription schedules and systems in advance. If you are eligible to apply for the relaxed special supply, you can slightly increase your chances of winning.

First, attention should be paid to the relaxation of income requirements for special supply. For private housing, the income criteria for newlywed special supply have been adjusted from the previous 120% (130% for dual-income) of the average monthly urban worker income to 140% (160% for dual-income) this year. For public housing, it has been relaxed from the previous 100% (120% for dual-income) to 130% (140% for dual-income) this year. The income criteria for the first-time homebuyer special supply have also changed. For public housing, it has been relaxed from 100% or less of the average monthly urban worker income to 130% or less, and for private housing, from 130% or less to 160% or less.

The ratio of priority supply and general supply, which are divided according to income criteria within special supply, has also changed. For newlywed special supply, the amount previously prioritized for those with income requirements of 100% (120% for dual-income) or less has been reduced from 75% to 70%, and the general supply ratio for higher-income applicants has increased from 25% to 30%. The first-time homebuyer special supply is also divided into 70% priority supply and 30% general supply. However, the 30% general supply is also drawn among those who failed to win in the priority supply.

From the 19th of next month, a minimum residence obligation period of at least two years will be imposed when winning an apartment under the price ceiling system. In public land, depending on the sale price, residents must live for 3 to 5 years from the initial move-in date, and in private land, a residence obligation of 2 to 3 years must be fulfilled. If the residence obligation period is not actually lived in, a penalty of imprisonment for up to one year or a fine of up to 10 million KRW will be imposed. However, if there are unavoidable circumstances such as overseas stay, work, livelihood, schooling, or medical treatment in another region during the residence obligation period, it will be recognized as residing in the house if confirmed by the Korea Land and Housing Corporation (LH).

Starting in July, pre-subscription will begin for 60,000 public sale apartments in the 3rd new towns such as Hanam Gyosan and Namyangju Wangsuk, as well as major metropolitan area sites. Pre-subscription is a system that selects winners for some units 1 to 2 years before the main subscription. It is implemented to stabilize the housing market by supplying housing early. Winners must remain non-homeowners until the main subscription to maintain eligibility.

The Ministry of Land, Infrastructure and Transport plans to conduct pre-subscriptions starting with Incheon Gyeyang in July, followed by Namyangju Jinjeop 2, Seongnam, Uiwang, Seoul Noryangjin Site of the Capital Defense Command (Subangsa) in July and August, and Namyangju Wangsuk 2, Seongnam, Siheung in September and October. From November to December, pre-subscriptions will be held in 3rd new towns such as Namyangju and Goyang, as well as Gwacheon and Ansan, supplying a total of 30,000 units early this year. The remaining 32,000 units are scheduled to recruit residents next year.

Ham Young-jin, head of the Zigbang Big Data Lab, said, "For actual demanders, an approach focused on subscription is still valid," adding, "It is advisable to focus on the price ceiling system supply in major metropolitan areas and pre-subscription supply, but considering strengthened residence obligations and loan regulations, about 60% of the sale price should be held in self-funding such as jeonse deposits."