Even After Winning the Subscription, Concerns Remain: "Must Wait Until Contract Completion Despite Full Sell-Out"

A Total of 376 Non-Sequential Subscription Announcements This Year... Twice as Many as Last Year
Buyers Also Hesitant to Sign Contracts... Increase in Unsold Houses Leads to Repeated 'Jubjub' Announcements

[Asia Economy Reporter Hwang Seoyul] Ms. Park, a housewife in her 50s, recently won a lottery for an apartment in a provincial area but is now unsure whether to proceed with the contract. At the time of applying, the sale price was lower than the market price of similar-sized units in nearby complexes, but within just a week, the recent actual transaction price dropped by 70 million KRW, making the sale price more expensive than the market price. Ms. Park lamented, "Although I applied for the lottery with the intention of living there, the real estate market downturn has made me reconsider many things."

As the real estate market freezes, a cold wave has hit the subscription market as well. Even when sales are fully booked, more subscribers are hesitating to finalize contracts due to rapidly falling resale prices, leading to unsold units caused by contract cancellations. Construction companies preparing for sales are expected to reconsider their schedules.

According to Cheongyak Home on the 8th, there were a total of 376 non-priority subscription announcements posted from January to December this year. Last year, there were 189 posts, so the number of announcements has roughly doubled. When unsold or uncontracted units occur after the resident recruitment announcement, these units can be supplied through non-priority subscriptions. The Housing Industry Research Institute (Jusan-yeon) reported that the unsold housing forecast index for this month reached 135.8, the highest this year. Jusan-yeon expects unsold units to increase rapidly due to contract cancellations and uncontracted winners after winning the lottery.

Even with full sales, no guarantee... "Need to wait until contract"

As more subscribers face dilemmas, construction companies find it difficult to be reassured even when sales are not undersubscribed. For example, ‘Gwangju The Park Vista Deciang’ had low competition during the general supply phase but succeeded in selling out all housing types after proceeding to the second priority supply. However, due to contract cancellations, uncontracted subscribers, or disqualified winners, 192 units of the 114㎡ exclusive area housing type are being supplied through non-priority subscriptions, with applications opening on the 12th.

In Suwon, Gyeonggi Province, ‘Yeongtong Prugio Tresence (A1BL)’ and ‘Yeongtong Prugio Pineville (A2BL)’ both closed all housing types in the first priority round with high competition rates of 27.34:1 and 15.42:1 respectively during general supply, but issued three non-priority subscription announcements from August to October. The ‘Yeongtong Prugio Pineville (A2BL)’ (exclusive area 84㎡C) still had 5 units unsold even during the October non-priority subscription.

Seoul, which had no concerns last year, is no exception. In the past two months, large complexes like ‘Olympic Park Foreon’ and ‘Jangwi Xi Radiant’ have held general supply, but competition rates were lower than expected, and voices suggest waiting until contracts are finalized.

Song Seunghyun, CEO of Urban and Economy, said, "If the competition rate does not reach double digits, it could psychologically cause many contract cancellations." Park Jimin, CEO of Wolyong Subscription Research Institute, analyzed, "Even though Seoul is under the price ceiling system, the sale prices are close to market prices, which burdens buyers more. The trend is to avoid buying unless the price is clearly cheaper."

Unsold Complexes Increase, ‘Jupjup’ Ineffective... Construction Companies’ Worries Deepen

As subscription demand decreases, unsold complexes are increasing significantly compared to last year. According to the Ministry of Land, Infrastructure and Transport, as of the end of October, there were a total of 47,217 unsold houses nationwide, a 13.5% increase from the previous month. Compared to 17,710 unsold houses in December last year, this is about 2.7 times higher. By region, 7,612 units were in the metropolitan area and 39,605 units in provincial areas. Post-construction unsold units, considered chronic unsold, totaled 7,077 nationwide.

The non-priority supply known as ‘Jupjup,’ which was popular last year, is facing a cold wind this year, with some complexes repeatedly issuing announcements due to continued undersubscription. In Yeonsu-gu, Incheon, ‘Songdo Luxe Ocean SK VIEW’ issued its 10th non-priority subscription announcement last month after repeated undersubscription. The same applies to Seoul; in Gwanak-gu, ‘Sillim Sky Apartment’ issued its 14th non-priority announcement in the same month.

With subscription demand frozen solid, construction companies are expected to face deeper concerns about their sales schedules. Amid uncertainty about next year’s real estate market, combined with base interest rates, rising material costs, and real estate PF issues, some are advancing their sales schedules. The Dunchon Jugong (Olympic Park Foreon), known as the largest reconstruction since the founding of Korea, also advanced its general sales, originally expected in January-February next year, to this month due to real estate PF funding shortages and high-interest burdens.

A sales official said, "I know some places have advanced their sales timing because of talks that the market will worsen next year."