Amid Subscription Shortfall, 1000:1 Competition Rate?... All Thanks to Market Price Gains

'Hillstate Prugio Suwon'
1865 Applicants for 6 Units
Over 100 Million KRW Possible in Price Gains

[Asia Economy Reporter Hwang Seoyul] Despite the decline in sale prices and a frozen subscription market, some complexes have shown competition rates in the four digits. This appears to be driven by expectations of price gains exceeding 100 million KRW due to low pre-sale prices.

According to Korea Real Estate Board's Subscription Home on the 6th, 1,010 applicants competed for one general sale unit (exclusive area 74.96㎡) at ‘Hillstate Prugio Suwon’ located in Gyodong, Paldal-gu, Suwon-si, Gyeonggi Province. This complex was completed in August this year and has already started move-ins. It consists of 33 buildings from basement level 3 to ground level 15, totaling 2,586 households. The current general sale units are 6 units canceled from the association sale.

Other exclusive areas also showed competition rates exceeding 100 to 1. For the 49.92㎡ and 59.95A㎡ units, 243 and 466 applicants applied for 2 units respectively, showing competition rates of 121.50 to 1 and 233 to 1. The 59.88B㎡ unit, with one household available, also recorded a competition rate of 146 to 1. In total, 1,865 applicants competed for 6 units.

Even amid a series of subscription shortfalls, this complex alone shows ‘lottery-like’ subscription competition rates due to price gains. The pre-sale rights traded before completion have already exceeded the pre-sale price. The 59.88B㎡ unit was traded at 580 million KRW in August, while the current pre-sale price is 429.3 million KRW. Considering the price gain, it exceeds 150 million KRW. Park Jimin, head of Wolyong Subscription Research Institute, analyzed, "Since the pre-sale price is based on prices from two years ago, the Suwon real estate market is not good, but the market price is higher than the pre-sale price."

The 74.96㎡ unit, which had the highest competition rate, also has a pre-sale price set much lower than nearby market prices. The ‘Maegyo Station Prugio SK View’ complex directly opposite sold a 74㎡A unit for 700 million KRW in August. Although this is 354.75 million KRW lower than the 1.05475 billion KRW price sold in February, it is still higher than the pre-sale price of ‘Hillstate Prugio Suwon’. One listing of the same area on Naver Real Estate is priced at 950 million KRW.

Because of this, the recent non-designated subscription for this complex also closed with high competition rates. On the 29th of last month, the non-designated general supply for 59.88B㎡ and 74.96㎡ units closed with competition rates of 886 to 1 and 1,865 to 1, respectively.

Experts predict that the polarization of subscription demand due to price gains will intensify further. Park said, "Depending on how much price gain is formed, some complexes will overheat, while others, even in Seoul, will continue to experience subscription shortfalls as now." He added, "Especially, with the lifting of the adjustment area designation, even under the same conditions, household member subscriptions are allowed and re-winning restrictions are removed, so subscription demand could increase by about 2.5 times."