This Year’s Preliminary Subscription: 30,200 Housing Units Released... Will It Stabilize House Prices?

Pre-Booking for 3rd Phase New Towns from July
Good Transportation Near Seoul Locations
Half Are Newlywed Hope Towns... Increased Winning Chances
Potential to Stabilize Housing Prices by Dispersing Seoul Demand
However, Effect May Be Reduced as Move-In Is Still Far Off

[Asia Economy Reporter Moon Jiwon] With the final confirmation of 30,000 pre-sale housing units including the 3rd phase new towns, industry attention is focused on how this will affect the rising apartment prices in the Seoul metropolitan area. Since many of the pre-sale units are located close to Seoul, such as Hanam Gyosan, Namyangju Wangsuk, and Goyang Changneung, and come with relatively affordable prices and new apartment premiums, it is expected to disperse housing demand from Seoul. However, some experts also predict that "short-term price stabilization will be difficult because it will take time until actual move-in."

On the 21st, the Ministry of Land, Infrastructure and Transport announced a total of 30,200 pre-sale units for this year, including the 3rd phase new towns. This matches the number disclosed when the government announced its pre-sale promotion plan last year. At that time, the government stated its intention to alleviate housing insecurity for the homeless by early supplying 60,000 units out of the 240,000 housing units to be supplied by 2022 through pre-sale. The remaining 30,000 units are scheduled to be supplied through pre-sale next year.

Many Prime Units Beyond 3rd Phase New Towns

The first pre-sale supply in July includes a total of 4,400 units, such as 1,100 units in Incheon Gyeyang, a 3rd phase new town, 1,600 units in Namyangju Jinjeop 2, 400 units in Wirye New Town, and 1,000 units in Seongnam Bokjeong 1. Incheon Gyeyang, which accounts for the largest portion, is expected to disperse housing demand from Incheon, Seoul, Bucheon, and Gimpo due to its excellent metropolitan transportation conditions, including the Seoul Metropolitan Area 1st Ring Expressway and Incheon International Airport Expressway, and its location on the boundary between Seoul and Bucheon, Gyeonggi Province.

In October, 9,100 units will be supplied in areas such as Namyangju Wangsuk 2 (1,400 units), Seongnam Sinchon, Nakseong, Bokjeong 2 (1,800 units), and Incheon Geomdan and Paju Unjeong (2,400 units). The Namyangju Wangsuk 2 district, a 3rd phase new town, is notable for being only 5.1 km from the Seoul boundary and adjacent to Byeollae, Jingeon, Jigeum, and Jinjeop 2 districts. The GTX-B line, scheduled to start construction in 2022, is nearby, indicating excellent development potential.

Demand Expected to Concentrate in Hanam Gyosan, Gwacheon Juam, and Goyang Changneung

In November, 4,000 units will be supplied in Hanam Gyosan (1,000 units), Gwacheon Juam (1,500 units), Siheung Hajung (700 units), and Yangju Hoecheon (800 units). The most notable among these is Hanam Gyosan, which is the most preferred among the 3rd phase new towns. It boasts the closest location to the Gangnam area, and last year, waiting demand for subscription surged, causing a sharp rise in jeonse (long-term lease) prices.

In December, the largest supply of 12,700 units will be released in Namyangju Wangsuk, Bucheon Daejang, Goyang Changneung (5,900 units), Guri Galmae Station area (1,100 units), and Ansan Singil 2 (1,400 units). Goyang Changneung is considered to have a good location as it is close to Ilsan New Town and adjacent to the boundary of Seoul’s Eunpyeong and Mapo districts. It is the second largest in area among the 3rd phase new towns after Namyangju Wangsuk and may create synergy effects with Samsong, Jichuk, and Wonheung districts.

Newlyweds Are the Biggest Beneficiaries... Account for Half of the Supply

The government included 14,000 units of Newlywed Hope Towns, accounting for about half of the pre-sale units. Therefore, many winning opportunities are expected to go to newlyweds and young people with unstable housing. The basic eligibility for Newlywed Hope Towns includes household members who have been married for less than seven years or have children under six years old and are homeless.

Newlywed Hope Towns will establish comprehensive childcare centers with concentrated childcare and educational facilities, various play environments, and child-friendly features such as noise reduction between floors. Considering the characteristics of newlyweds who have difficulty preparing funds for home purchase, dedicated financial products will be supported, and loan conditions will be partially eased. The government will first provide information on eligibility and subscription schedules through its website and will sequentially disclose detailed district/block information, complex layouts, and floor plans later.

Lee Eunhyung, a senior researcher at the Korea Construction Policy Institute, said, "Pre-sale is positive in the long term as it alleviates housing insecurity for demanders," but added, "However, since it takes considerable time until the actual housing is supplied, there will be no immediate effect in dispersing Seoul demand, and jeonse demand may surge in areas like Gwacheon."