Busan Apartment Initial Sales Rate Soars from 3.3% to 70.5%
Ulsan Jumps from 25.4% to 92.6%
"Marketing Effects Like Discount Sales of Unsold Units"
"Polarization Widens in Busan and Ulsan"
Until the third quarter of this year, Busan and Ulsan regions, which struggled to sell off unsold apartments, saw a sharp rise in the initial sales rate of apartments. This is analyzed to be due to the strong sales of apartments in high demand, along with various self-help measures such as price discounts and relaxed down payment requirements implemented by some complexes. However, it is forecasted that this is a temporary phenomenon and it will be difficult to reverse the trend of expanding unsold apartments in provincial areas.
Sudden Surge in Initial Sales Rate
According to the ‘Private Apartment Initial Sales Rate’ by the Housing and Urban Guarantee Corporation (HUG) on the 13th, the apartment sales rate in Busan jumped from 3.3% in the second quarter to 70.5% in the third quarter this year. During the same period, Ulsan’s rate also rose from 25.4% to 92.6%.
The initial sales rate refers to the ratio of the number of units actually contracted to the number of units offered for sale in private apartments where the subscription period has exceeded 3 months but is less than 6 months. For complexes sold in March, the contract rate between June and September is observed. HUG calculates the initial sales rate for complexes with 30 or more units sold.
The sudden sales boom in Busan and Ulsan contrasts with the nationwide sales market. The national sales rate was 54.5% in the third quarter of this year, down from 64.2% in the previous quarter. Excluding Busan and Ulsan, only Gyeonggi’s sales rate slightly increased from 66.8% to 67.6% during the same period, while other regions including Seoul showed weaker sales performance compared to the previous quarter.
This is analyzed as a result reflecting the strong sales of some apartments. According to the Korea Real Estate Board’s Subscription Home, among the complexes sold in the first half of this year in Busan and Ulsan, only one apartment in each region showed high competition rates in the 1st and 2nd priority subscriptions. ‘Yangjeong Lotte Castle Frontiel’ in Yangjeong-dong, Busanjin-gu, sold in June, received 2,572 subscription applications for 301 units in the 1st and 2nd priority subscriptions. In Ulsan, ‘Lael S’ in Sinjeong-dong, Nam-gu, sold in May, attracted 5,849 applicants for 698 units.
Relentless Self-Help Measures Also Had an Impact
It is also analyzed that self-help measures by the construction industry had an impact. As unsold apartments expanded in Busan and Ulsan, the construction industry lowered prices and reduced down payment standards. Instead of leaving units unsold, they lowered expectations to target demand and raise sales rates. However, this strategy only works for some complexes, and the overall regional market remains stagnant.
Except for some apartments that recorded strong sales, most apartments experienced unsold units. In Busan, 9 out of 14 complexes excluding cancellations by union members failed to meet the 1st and 2nd priority subscription quotas. ‘Bohae Sun City River Park’ in Gwaebeop-dong, Sasang-gu, sold in January, received only 17 applications for 208 units. ‘Dongnae Ecopalis Asiad’ in Oncheon-dong, Dongnae-gu, sold in June, received only 41 subscription applications for 152 units.
In Ulsan, all complexes except Lael S among the seven complexes received fewer subscription applications than the number of units offered. Representative examples include ‘Hillstate Munsuro Central’ and ‘The Pol Ulsan Sinjeong’ in Sinjeong-dong, Nam-gu.
An official from the sales industry explained, "There is a clear polarization in sales within Busan and Ulsan; only well-performing complexes show good sales results, while the rest are in serious condition," adding, "Various marketing strategies only work in certain places."
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