[Practical Finance] Subscription Game for Apartment Prices of 400M, 500M, and 600M Won

Pre-sale of 10,000 Houses in 3rd Phase New Town Starts on 25th
Prices at 60-80% of Market Value... Opportunity for Newlyweds and Young Workers

Starting from the 25th, the second round of preliminary subscription will begin for 10,102 households in the third phase new towns such as Namyangju Wangsuk2 and Seongnam Nakseong. The supply volume has increased compared to the first round, and many areas of interest are included. The estimated sale prices are mostly in the 300 million to 400 million KRW range, about 60-80% of the surrounding market prices. Experts advise that choosing large-scale housing sites with abundant supply and relatively less popular small to medium-sized units is a way to increase the chances of winning the subscription.

◇Aim for 100% local supply for units under 84㎡ = Following the supply of 4,333 households in the first round of preliminary subscription in July, the second round will offer a total of 11 districts with 10,102 households. By district, the supply is △Paju Unjeong2 2,150 households △Incheon Geomdan 1,160 households △Namyangju Wangsuk2 1,410 households △Uijeongbu Ujeong 950 households △Gunpo Daeyami 950 households △Seongnam Nakseong 890 households △Uiwang Wolam 830 households △Seongnam Bokjeong2 630 households △Suwon Dangsu 460 households △Bucheon Wonjong 370 households △Seongnam Sinchon 300 households.

Supply is concentrated in areas of interest such as 2nd and 3rd phase new towns and Seongnam city, with 2,382 units under 84㎡, accounting for 23.6% of the total. This is a significant increase compared to only 73 units supplied in the first round. Prospective applicants from 3-4 person households are expected to actively apply. However, the 84㎡ units tend to have high competition rates. Ham Young-jin, head of the Zigbang Big Data Lab, said, "If the number of household members is not large, aiming for small to medium-sized units of 51-74㎡ is a way to increase the chances of winning." In the first preliminary subscription, demand was concentrated more on medium-sized units than small ones.

Targeting areas where 100% of the supply is allocated to local residents is also a way to reduce competition. Seongnam Sinchon and Uijeongbu Ujeong are representative examples. Since the number of applicants is small, competition pressure is relatively low. The mandatory residence period for local priority supply only needs to be fulfilled by the time of the main subscription. Since the mandatory residence period and other conditions vary depending on the size and location of the complex and whether it is designated as a speculative overheated district, it is advisable to check the subscription announcement carefully.

Namyangju Wangsuk2, Incheon Geomdan, Suwon Dangsu, and Paju Unjeong3 districts belong to large-scale housing sites with large supply volumes per site. Large-scale housing sites allow not only local residents but also residents of the metropolitan area to apply, so strategic approaches considering location conditions are necessary.

◇85% of total supply is special supply... Check eligibility conditions= In the second preliminary subscription, newlyweds are given the most opportunities. Only 15% of the total public sale supply is allocated for general supply. The remaining 85% is supplied as special supply: newlyweds (30%), first-time homebuyers (25%), multi-child families (10%), elderly parent support (5%), and others (15%). Newlyweds can choose between the newlywed special supply and first-time homebuyer special supply within the public sale special supply, depending on marriage duration and number of children. The Newlywed Hope Town is also included as an option. However, it is not possible to apply for both public sale and Newlywed Hope Town simultaneously. Applicants should strategically choose the more advantageous option based on location and eligibility requirements.

According to a survey by real estate analysis firm Real House on the special supply competition rates of 93 private and public complexes supplied from January last year to August this year, where competition rates exceeded 10:1, the multi-child special supply had the lowest competition rate at 10.60:1. The highest competition rate (118.99:1) was for the first-time homebuyer special supply.

If you do not qualify for special supply or Newlywed Hope Town, you must aim for general supply. However, the supply is small and competition is high. Having a high deposit amount in the subscription savings (or comprehensive housing subscription savings) is absolutely advantageous. The winning threshold for general supply in the first preliminary subscription in July averaged 19.45 million KRW in subscription savings deposits. Among them, the popular Incheon Gyeyang district required 21.10 to 24.00 million KRW, and Seongnam Bokjeong1 district required 18.90 to 21.69 million KRW.

◇If only considering winning chances, Newlywed Hope Town is better= Experts advise that newlyweds whose main goal is winning should aim for Newlywed Hope Town, which has a lower competition rate than special supply. According to the results of the first preliminary subscription, the average competition rate for Newlywed Hope Town was 13.7:1, lower than 28.1:1 for public sale.

The preliminary subscription supply for Newlywed Hope Town is △Seongnam Nakseong 884 households △Seongnam Bokjeong2 632 households △Gunpo Daeyami 952 households △Uiwang Wolam 825 households △Suwon Dangsu 459 households △Bucheon Wonjong 374 households, totaling 4,126 households. Basic eligibility for Newlywed Hope Town includes newlyweds who have been married within 7 years or have children under 6 years old and are members of a non-homeowner household, prospective newlyweds planning to marry within one year from the announcement date and can prove marriage within that period, and single-parent families with children under 6 years old who are members of a non-homeowner household.

However, since special supply and Newlywed Hope Town have strict income and asset requirements, it is important to carefully check whether you meet these criteria in advance. To apply for newlywed special supply and Newlywed Hope Town, the monthly average income of urban workers must be 130% or less (140% for dual-income households), 130% or less for first-time homebuyers, and 120% or less for elderly parent support and multi-child families. Asset criteria are 215.5 million KRW for real estate and 34.96 million KRW for automobiles.

◇Estimated sale price is 60-80% of market price... mostly in the 300 to 400 million KRW range= The estimated sale prices for the second round are expected to be about 60-80% of the surrounding market prices. Public sale houses supplied on public land are subject to the price ceiling system based on the formula ‘land cost + construction cost + additional cost.’ Since there was controversy over high sale prices in some areas during the first preliminary subscription, the Ministry of Land, Infrastructure and Transport plans to calculate estimated sale prices as reasonably as possible. The Ministry stated, "Except for Namyangju Wangsuk2 district (400 to 500 million KRW) and Seongnam areas such as Sinchon, Bokjeong2, and Nakseong (400 to 600 million KRW), most areas will have sale prices around 300 to 400 million KRW." Per 3.3㎡, Namyangju Wangsuk2 is priced at 15.69 to 16.78 million KRW, Seongnam Nakseong at 20.02 to 20.28 million KRW, and Incheon Geomdan at about 12.78 million KRW.