Concentrated in Wangsukman... Why Did the Secondary Pre-Subscription Competition Rate Plummet?

[Image source=Yonhap News]

As buying demand in the real estate market weakens, the competition rate for the second round of public pre-sale subscriptions in the Seoul metropolitan area has sharply declined. This is interpreted as a decrease in subscription applicants due to strict eligibility criteria and a lack of appeal to buyers in terms of area, move-in timing, and location.

According to the Ministry of Land, Infrastructure and Transport on the 9th, the second round of public pre-sale subscription closed with 101,528 applicants for 10,102 units, recording an average competition rate of about 10 to 1. For public sale housing, the average competition rate was 15 to 1. The competition rates for special supply and general supply were 8.3 to 1 and 42.2 to 1, respectively. Although the competition rate is relatively high compared to the supply volume, it is analyzed that demand has significantly decreased compared to the first round of pre-sale subscriptions.

In the first round of pre-sale subscriptions conducted for areas such as Gyeyang in Incheon and Jinjeop 2 in Namyangju, 93,798 applicants competed for 4,333 units, showing a competition rate of 21.7 to 1. The popular Incheon Gyeyang 84㎡ units recorded a competition rate of 381.1 to 1, and Namyangju Jinjeop 2 84㎡ units recorded 112.3 to 1, indicating a concentration of subscription applications.

However, in the second round of pre-sale subscriptions, except for Wangsu 2 District in Namyangju, which recorded a competition rate of 34.2 to 1 with 48,325 applicants for 1,412 units, the competition rates fell short of expectations. In particular, Uijeongbu Ujeong recorded 1.3 to 1, Gunpo Daeyami and Uiwang Wolam recorded only 1.9 to 1. Bucheon Wonjong, where newlywed hope towns were supplied, barely avoided undersubscription with 79 applicants for 76 units.

The industry analyzes that the decline in housing purchase sentiment and government loan regulations have influenced the decrease in subscriptions from actual demanders. Pre-sale subscriptions were introduced to advance supply before the main subscription to disperse the overflowing housing demand, but as the real estate market in Seoul and the metropolitan area has become more cautious recently, the attractiveness of pre-sale subscriptions has diminished.

There are also criticisms that the supply in the second round of pre-sale subscriptions did not attract much interest from buyers. A couple in their 30s living in a rented house in Seodaemun-gu, Seoul, said, "Due to recent concerns such as the Daejang-dong incident, there are growing worries that new town developments may face setbacks, which could delay pre-sale move-ins further," adding, "Given the high uncertainty, I don't feel the need to apply for pre-sale subscriptions now and wander through rented houses for years."

Regarding the newlywed hope towns, it is analyzed that many newlyweds are turning away because the area is small and if the sale price exceeds 307 million won, they are required to join the profit-sharing mortgage. In the second round of pre-sale subscriptions, areas like Seongnam Bokjeong 2 and Seongnam Nakseong, despite having good locations, only supplied small units under 60㎡.

The mandatory subscription to a dedicated mortgage that offers a fixed interest rate of 1.3% annually and loans up to 70% of the house price, but requires the Housing and Urban Fund to reclaim up to 50% of the capital gains when selling the house and repaying the loan, is also causing resistance. The Korea Land and Housing Corporation (LH) did not actively inform applicants about this mortgage during the first round of pre-sale subscriptions but displayed banner ads ahead of the second round after controversy over 'concealment' arose.

An official from the sales industry explained, "People in their 30s have witnessed those in their 40s and 50s making huge capital gains through real estate recently, so their resistance to profit sharing is naturally strong."

However, there is also analysis that competition rates could soar again depending on location, as the supply volume in the metropolitan area will decrease until next year and the pre-sale prices remain lower than nearby market prices. The third round of pre-sale subscriptions, with announcements scheduled for the 18th, is expected to include many areas with strong buying demand such as Hanam Gyosan and Gwacheon Juam.