Seoul Apartment Sale After a Month... Subscription Competition Rate 'Single Digit'

Changdong Dauatrice
1st Priority Subscription Competition Rate 7.27 to 1
Subscription Market Also Showing Adjustment Trend

[Asia Economy Reporter Kim Hyemin] In Seoul, which is experiencing a supply drought, the newly launched pre-sale units released after about a month received a disappointing single-digit competition rate. As transactions have contracted and the sales market has entered an adjustment phase, analysis suggests that the subscription market is following a similar trend.

According to Korea Real Estate Board's Subscription Home on the 26th, the 'Changdong Dow Artiche Mixed-Use Apartment' in Changdong, Dobong-gu, Seoul, recorded a competition rate of 7.27 to 1 with 298 applicants for 41 units during the first-priority subscription held from the 24th to 25th. Despite promoting its double station area (Changdong Station and Ssangmun Station) in Changdong, which has development prospects even within Dobong-gu, it essentially failed to attract strong interest.

In the real estate market, the main reasons cited for the lack of interest from applicants are that this apartment complex is a small-scale development with only 89 units and that the pre-sale prices were set high. The pre-sale price for the most common exclusive area of 58-59㎡ among the general units was set at up to 811.8 million KRW, exceeding the surrounding market prices of 750 million to 800 million KRW. In particular, the pre-sale price for the 122㎡ unit was 1.73596 billion KRW, more than 300 million KRW above nearby market prices.

Outlying areas of Seoul such as Dobong-gu and Gangbuk-gu are currently not subject to the pre-sale price ceiling system, and most complexes launched this year in these areas have set high pre-sale prices, resulting in poor sales performance. Hanwha Forena Mia in Mia-dong, Gangbuk-gu, which held subscriptions in March, also recorded single-digit competition rates due to pre-sale prices set higher than nearby market prices. Cantavil Suyu Palace in Suyu-dong, Gangbuk-gu, has a pre-sale price of up to 900 million KRW for the 59㎡ unit and remains largely unsold.

The recent contraction in sales transactions in the real estate market also appears to have had an impact. With the perception of peak housing prices, loan regulations have been tightened since this year, including the application of the Debt Service Ratio (DSR) to apartment pre-sale balance payments, and combined with interest rate hikes, enthusiasm for subscriptions has waned following the sales market. Kyunghee Yeo, Senior Researcher at Real Estate R114, said, "Just as the preference for a single well-located home is strengthening in the Seoul sales market, a selective subscription atmosphere is deepening in the subscription market as well," adding, "Pre-sale complexes with weaker competitiveness in location, brand, number of units, and community facilities will likely see lower competition rates going forward."