Unranked Subscription Also Faces Shortfall... Songdo Becomes a 'Vacant Unit Graveyard'

Loan blocked for prices over 900 million won
Supply floods market, causing cautious wait-and-see stance

View of apartments across Seoul from Namsan. Photo by Mun Ho-nam munonam@

[Asia Economy Reporter Ryu Tae-min] The fever of the subscription market in Songdo, once called the "Gangnam of Incheon," is rapidly cooling down. Even in the non-priority subscription (jupjup) for more than 100 households, demand is insufficient, leading to another unsold housing crisis. It appears that the market is cautious due to the supply volume flooding in and the fact that the mid-term loan is blocked as the sale price exceeds 900 million KRW.

According to the Korea Real Estate Agency's subscription homepage on the 12th, "Songdo Lux Ocean SK View" in Songdo-dong, Yeonsu-gu, Incheon, which conducted a non-priority subscription for 129 households the day before, had 15 households unsold. The three areas with unsold units are all 84㎡ exclusive area types, which are highly preferred by actual buyers. For the 84㎡E, which recruited 53 households, 47 applied, leaving 6 unsold; for 84㎡B, 18 households were recruited with 10 applicants, leaving 8 unsold; and for 84㎡C, 25 households were recruited with 24 applicants, leaving 1 unsold.

This complex launched a general supply of 1,114 households in February, but 129 of them remained uncontracted. This is because the sale price of the 84㎡ (exclusive area), known as the "national standard size," approached 900 million KRW, making bank mid-term loans difficult. The sale price for the 84㎡ exclusive area ranged from 833 million to 910 million KRW. Additionally, if paid options such as balcony expansion or system air conditioner installation are added, most households exceed 900 million KRW.

Non-priority subscription refers to accepting new subscription applications for remaining units that occur due to non-contracts or disqualifications after the resident recruitment. Anyone aged 19 or older residing in the relevant area can apply without restrictions such as holding a subscription savings account or being a non-homeowner.

Recently, unsold complexes have been appearing one after another in the Songdo area. "Songdo Central Park Riverich," which sold 39 households last October, remains unsold even five months after the first subscription. "Songdo Xi The Star," which received subscriptions at the end of last year, also saw about 530 households cancel their contracts.

Some Areas in Northern Seoul Also Undersubscribed... ‘Sorting the Wheat from the Chaff’ Begins

This phenomenon is not limited to Songdo. Unsold units are increasing in northern Seoul as well. "Cantavil Suyu Palace" in Suyu-dong, Gangbuk-gu, Seoul, which conducted a non-priority subscription for 198 households the day before, again had 31 households unsold. Last month, "Buk Seoul Xi Polaris" in Mia-dong, Gangbuk-gu, Seoul, also conducted a non-priority subscription for 18 unsold units.

This is due to the soaring housing prices slowing down since the end of last year, reducing expectations for capital gains. According to the Korea Real Estate Agency, apartment prices in the metropolitan area have fallen for 10 consecutive weeks since the fifth week of January, recording -0.23%. In Incheon, apartment prices also showed a 10-week consecutive decline or stagnation, falling by -0.20%.

Lim Byung-chul, chief researcher at Real Estate R114, said, "Recently, the supply volume in the Incheon area has increased sharply and the price decline trend has continued, so the 'sorting the wheat from the chaff' atmosphere has begun." He added, "Moreover, with more supply expected next year and the impact of interest rate hikes increasing loan burdens, contract cancellations are increasing."