[Practical Finance] Capable 2030s, the Door to 'Gangnam Apartment Entry' Has Opened

Introduction of Small-to-Medium Lottery System... Young Generation Also Eligible to Win
10 Complexes Including Hangangbyeon Cheongdam Leel Await Subscription
High Sale Prices Require Considering Financial Capacity and Schedule When Applying

The door to entering Gangnam has opened for the 2030 generation with low subscription scores. This year, as a big market is set up in the three Gangnam districts?Gangnam, Seocho, and Songpa?there are lottery quotas even for small and medium-sized units due to the reform of the subscription system. With expected capital gains of several hundred million won and the removal of the hurdle for interim payment loans, young prospective subscribers are expected to focus their attention.

Lottery system for small and medium-sized units in the three Gangnam districts... Opportunity for financially capable 2030 generation

According to the Ministry of Land, Infrastructure and Transport on the 24th, a partial lottery system is currently applied when subscribing to apartments with exclusive areas of 85㎡ or less in speculative overheated districts such as the three Gangnam districts and Yongsan-gu. As a result of the government's implementation of the revised Housing Supply Rules in April, 60% of units under 60㎡ and 30% of units between 60 and 85㎡ are supplied through a lottery.

Until now, apartment subscriptions in Gangnam were just a "pipe dream" for the 2030 generation. Before the revision, in regulated areas, 100% of small and medium-sized units under 85㎡ were selected through a point-based system. The point system selects winners based on the highest scores calculated by adding points for the period of no home ownership (32 points), number of dependents (35 points), and subscription account duration (17 points), making it practically difficult for the low-scoring 2030 generation to win. However, as the government reformed the subscription system to resolve unsold units and support real demand for home ownership, the door to entering Gangnam has opened for young people.

Ten complexes to be supplied in the three Gangnam districts this year... including Cheongdam Le L and Shinbanpo Maple Xi

This year, a big market will be held in the three Gangnam districts. Currently, 10 complexes with 11,720 households are scheduled for supply. Among them, the general supply volume is tentatively estimated at 2,478 households. Looking at major complexes, in Gangnam-gu, Cheongdam Le L, which reconstructs the Cheongdam Samik Apartment by the Han River, is considered a major project. It consists of 9 buildings up to 35 floors with 1,261 households, of which 176 are for general supply. The supply is expected to take place by September at the latest.

In Seocho-gu, Shinbanpo Maple Xi, which reconstructs Shinbanpo 4 District in Jamwon-dong, is expected to be supplied as early as September. It is a large complex with 29 buildings up to 35 floors and 3,307 households, with 236 households for general supply. Raemian One Perla, which reconstructs Bangbae 6 District (1,097 households), is expected to supply 465 households for general sale.

In Songpa-gu, Jamsil Raemian I-Park, which reconstructs Jamsil Jinju in Sincheon-dong, will be built with 23 buildings up to 35 floors and 2,678 households, with an expected 578 households for general supply.

Additionally, △ Gangnam-gu Daechi-dong DH Daechi Edelweiss (76 households for general supply), Dogok-dong Raemian Leventus (133 households for general supply) △ Seocho-gu Banpo-dong Raemian One Pentas (292 households for general supply), Bangbae-dong Acro Ritz County (166 households for general supply) will enter the supply market in the second half of the year.

[Image source=Yonhap News]

Interim payment loans now possible... Careful financial planning needed due to high prices

Experts expect that interest from prospective subscribers aiming to enter the Gangnam area will concentrate as the subscription threshold lowers. Especially, with the easing of loan regulations allowing interim payment loans even for high-priced apartments, competition is expected to be fierce. The government previously allowed interim payment loans only for units priced below 900 million won, relaxed it to below 1.2 billion won in November last year, and has now completely abolished the restriction.

Also, unlike other areas, the three Gangnam districts, which are speculative overheated districts, still apply the price ceiling system. Since the supply price is cheaper than the market price, significant capital gains are expected upon winning. For example, the supply price of Cheongdam Le L is likely to be set in the 60 million won range. If estimated at 60 million won, the general supply price for a 59㎡ unit is expected to be 1.5 billion won, and for an 84㎡ unit, 2.04 billion won. Considering that the recent actual transaction price (January) of a nearby complex, Cheongdam Xi 82㎡, is 2.8 billion won, capital gains of over 700 million won based on the standard unit size can be expected.

However, even with the price ceiling system applied, the supply prices in the prime locations of the three Gangnam districts are inevitably very high compared to other areas. Therefore, experts advise that prospective subscribers carefully consider whether they can meet the payment schedule for the down payment, interim payment, and balance, and whether they can bear the interest burden before attempting subscription.

A real estate industry official said, "It is true that the door to entering Gangnam has opened for low-score applicants, but since the prices are high and some areas are designated as land transaction permission zones requiring actual residence, various factors need to be considered," adding, "Careful financial planning is necessary before challenging the subscription."