[Jiptok] The Polarization of 'Jupjup' Is the 'Butterfly Effect' of the Price Ceiling System

Gangdong 'Hillstate Richeville Gangil' Sees Competition Rate of 29,496 to 1
Clear Polarization in Non-Order Subscription Amid General Subscription Contraction

Demand Concentrates with Advantages in Sale Price and Location
Industry Points Out "Side Effects of Sale Price Ceiling System"
Demand Concentrated Only in Gangnam Further Stimulates Housing Prices

Image sketch related to Jamsil 5 Complex Apartment. Photo by Yongjun Cho jun21@

The non-priority subscription ('Jupjup') for 'Hillstate Lishuvil Gangil' in Gangdong-gu, Seoul, held on the 8th, lived up to its reputation as a '300 million won lottery.' For one unit of 101㎡ exclusive area, 29,496 people competed to become homeowners. The day before, the subscription competition rate for six units also recorded an average of 2,783 to 1. The low sale price led to high competition rates. The prices of 84㎡ exclusive area (73.26 million to 77.27 million won) and 101㎡ exclusive area (88.07 million won) were applied as they were in 2020 when the sale price ceiling system was first applied. This is about 300 million won cheaper compared to the current surrounding market prices.

As polarization is clearly emerging in the recent non-priority subscription market, an analysis suggests that the sale price ceiling system is acting as a cause of this polarization. While complexes in some local areas and parts of the metropolitan area repeatedly hold non-priority subscriptions due to sales failures, in places like Gangnam, Seoul, where the sale price ceiling system is applied, demand swarms like bees every time there is a non-priority subscription, showing a clear polarization.

According to the KB Financial Group Management Research Institute's report titled 'The Complex Non-Priority Subscription System Explained,' among the non-priority subscription complexes announced from March 2022 to April this year, 11.6% had competition rates exceeding 1000 to 1. Subscription shortfalls accounted for 18.6%. The report explained, "Non-priority subscriptions can be applied for regardless of whether one has a subscription savings account, residence restrictions, or homeownership status, so when there are price or location advantages due to the sale price ceiling system, demand inevitably concentrates."

The 'Jupjup' complex that recorded an all-time high competition rate was 'The H Firstier I-Park' in Gaepo-dong, Gangnam-gu, Seoul, where the sale price ceiling system was applied. In February this year, a total of three units by area were released, attracting a staggering 1,013,000 applicants. The sale price was suppressed by the ceiling system, so winning meant a potential market price gain of up to 1 billion won, leading to high competition rates.

The report explained, "The exclusive 39㎡ units could yield market price gains of 400 million to 650 million won, the 132㎡ units 1.7 billion to 2 billion won, and the 59㎡ units 850 million to 1.1 billion won, attracting an enormous number of applicants," and criticized, "Such so-called 'blind subscriptions' and indiscriminate applications cause market distortions, depriving real demanders of opportunities and generating unnecessary work and costs."

Kim Hyoseon, Senior Real Estate Specialist at NH Nonghyup Bank, analyzed, "Currently, the sale price ceiling system is applied in four areas: Gangnam-gu, Seocho-gu, Songpa-gu, and Yongsan-gu. The apartment sale prices in these areas have recently risen nearly twofold due to increased construction costs, becoming similar to prices in other parts of Seoul. As a result, demanders focus more on Gangnam without considering other areas, further stimulating Gangnam housing prices." This means that the original purpose of the sale price ceiling system?to stabilize housing prices?is undermined by the reality that most demanders aim for market price gains through non-priority subscriptions.

Kim emphasized, "There aren't enough non-priority subscription units to provide opportunities to many people, and in places like Gangnam, sales would do well even if prices were raised. Therefore, it is time to reconsider the sale price ceiling system to normalize the subscription market."