Housing Prices Stirring with the Oh Se-hoon Effect... Unfading Enthusiasm for Subscription

Seoul Apartment Sales Supply-Demand Index Reverses in One Month
Sales Prices Rise in All Districts Amid Reconstruction Expectations

Seoul Mayor Oh Se-hoon is shaking hands with construction site officials at the opening ceremony of the Sinwol-Yeouido Underground Road held in Yeouido, Seoul, on the afternoon of the 15th.

After the announcement of the 2·4 housing supply plan, the housing market, which seemed to have entered a wait-and-see mode, is stirring again. Following the Seoul mayoral by-election, housing prices, especially for reconstruction apartments, have been fluctuating, stimulating surrounding market prices, showing the 'Oh Se-hoon effect,' while the enthusiasm in the subscription market also shows no signs of cooling down.

According to the Korea Real Estate Board on the 16th, the apartment sales supply-demand index in Seoul this week (as of the 12th) rose to 100.3, up 4.2 points from last week (96.1), surpassing the baseline (100) again. Last week, it fell below the baseline for the first time in four months but rose above it again in just one week. The sales supply-demand index indicates that the closer to '0,' the more supply exceeds demand, and the closer to '200,' the more demand exceeds supply.

The wait-and-see trend in Seoul housing prices, caused by increased tax burdens due to official price hikes and the impact of the 2·4 plan, does not seem to be lasting long. The turning point was the Seoul mayoral by-election. Areas with recent expectations of regulatory easing, such as Gangnam, Nowon-gu, and Yeongdeungpo-gu, led the rise in housing prices.

This week, apartment prices also rose by 0.07%, increasing the rate of rise compared to last week (0.05%). There was not a single district where the rate of increase shrank compared to the previous week. Since the first week of February this year (0.10%), the rate of increase had been steadily shrinking, dropping to 0.05% last week, but now it appears to be expanding again after 10 weeks.

The 'Oh Se-hoon premium' was especially concentrated in Gangnam. According to the Ministry of Land, Infrastructure and Transport's real transaction price disclosure system, a 99.38㎡ (exclusive area) apartment in Jamsil-dong Asia Athlete Village, where reconstruction is underway, was sold for 2.8 billion KRW on the 1st of this month, up 200 million KRW from 2.6 billion KRW in November last year. A 160.28㎡ apartment in Apgujeong-dong Hyundai 2nd Complex in Gangnam-gu was sold for 5.43 billion KRW on the 5th. Compared to the same area being sold for 4.25 billion KRW on December 7 last year, this is an increase of 1.18 billion KRW.

The subscription fever aiming for 'lottery-like sales' is also not fading. According to Real Today, a real estate research firm, analyzing the number of first-priority subscription accounts for private apartments nationwide up to the 12th of this month, a total of 610,114 subscription accounts were applied for. Compared to 512,428 in 2019, this is about a 20% increase.

The 'Gwanak Jungang Heights Foret,' the first street housing maintenance project apartment involving Seoul Housing and Communities Corporation (SH Corporation), attracted 3,922 applicants for 18 units in the first-priority subscription held on the 12th, showing a competition rate of 217.9 to 1. For the newlywed special supply of 63㎡, which had only one unit allocated, 1,085 subscription accounts were submitted.

Many cases have recorded competition rates exceeding expectations despite the label of 'high pre-sale price controversy.' The 'Daegu Hillstate Manchon Station,' which completed subscription this month, had a pre-sale price of 900 million KRW for an 84㎡ unit, and despite the absence of group loans for intermediate payments, the first-priority competition rate exceeded 20 to 1.

The 'e-Pyeonhansesang Yeondong Central Park 1 and 2 Complex,' supplied in Yeondong, Jeju City, Jeju Province, attracted 2,802 applicants for 204 units in the first-priority subscription held on the 12th, showing an average competition rate of 13.7 to 1. This apartment also had a highest pre-sale price of 948.3 million KRW for an 84㎡ unit. A real estate industry official predicted, "As a decrease in new supply is expected in the future, the subscription fever will become even hotter."