[Real Estate AtoZ] Changed Pre-Sale... What Is 'Nanum-type' Housing?

[Asia Economy Reporter Ryu Taemin] The Yoon Seok-yeol administration's new public sale model, ‘New Home,’ will begin pre-subscription from the 6th. Approximately 2,300 households will be available in areas such as Goyang Changneung in Gyeonggi, Yangjeong Station area, Namyangju Jinjeop 2, and Seoul's Godeok Gangil 3 Complex. Unlike before, this pre-subscription includes complexes offered under the ‘Nanum-type’ method and also features ‘Youth Special Supply’ units, drawing increased attention to the changed subscription system.

What exactly is the ‘Nanum-type’ public sale?

The Nanum-type public sale is one of the three models proposed by the government last October. The core idea is to supply housing at a low sale price with loan support, and upon resale, share the capital gains with the public institution.

First, the sale price is set at 70% of the market price. Buyers can obtain loans up to 80% of the sale price (maximum 500 million KRW) with a fixed interest rate of 1.9% to 3.0% over a 40-year term, reducing early financial burden. For example, a house valued at 500 million KRW is sold for 350 million KRW, and the buyer can borrow 280 million KRW. The required equity capital is only 70 million KRW.

After fulfilling a mandatory residence period of 5 years, the buyer can resell the property to the Korea Land and Housing Corporation (LH). At this point, the seller receives 70% of the capital gains, while the remaining 30% is shared with the public institution. This is similar to the previously supplied ‘Newlywed Hope Town’ model.

Other models include the ‘Selective-type’ and ‘General-type.’ The Selective-type public sale allows residents to live at a low rent first and decide whether to purchase after 6 years. The General-type public sale is the conventional public sale where applicants apply and purchase based on eligibility criteria.

‘Youth Special Supply’ newly established for 20s and 30s

Another feature of the Nanum-type public sale is the inclusion of youth special supply units. The government has newly established ‘Youth’ as a special supply category. 15% of the Nanum-type public sale units are allocated to the youth special supply category. In Goyang Changneung district, 128 out of 877 units, and in Yangjeong Station area, 81 out of 549 units fall under this category.

Eligibility requires applicants to be between 19 and 39 years old, be without home ownership history, and have no housing ownership. They must have contributed to a subscription savings account for at least 6 months. Income criteria also apply: monthly income must not exceed 4.49 million KRW, total assets must be below 260 million KRW, and parents’ total assets must be below 975 million KRW.

Among youth applicants, employed individuals have an advantage. 30% of the youth special supply units are preferentially allocated to those who have paid income tax for more than 5 years. Additionally, the order of selection is determined by points awarded for various criteria, so those with relatively lower income and assets and longer employment periods have a higher chance of winning.

Which areas should you apply to for the ‘Nanum-type’ public sale?

The areas supplied through this pre-subscription are Godeok Gangil district, Goyang Changneung district, Namyangju Jinjeop 2 district, and Yangjeong Station area. Among these, the Nanum-type public sale is available in Goyang Changneung and Yangjeong Station areas. Goyang Changneung district offers a total of 877 Nanum-type units, and Yangjeong Station area offers 549 units. The estimated sale prices for an 84㎡ unit are 552.83 million KRW in Goyang Changneung and 428.31 million KRW in Yangjeong Station area. Namyangju Jinjeop 2 district supplies General-type public sale units.

The only Seoul area among the rest, Godeok Gangil district, offers land leasehold housing. Land leasehold housing is a type where the land is owned by the public, and only the building is sold. The sale price is about half that of regular housing, but a land lease fee is charged. Residents can live for usually 40 years up to a maximum of 80 years, and the lease fee can be lowered by converting the deposit.

However, there is a strong perception that land leasehold housing may result in long-term losses. Since the buyer does not own the land, it is difficult for residents to proceed with reconstruction as they wish in the future. Additionally, there are concerns about depreciation of the building value over time.