Seoul Pre-sale and Occupancy Rights Transactions Halved from Previous Month... Volume Continues to Shrink [Real Estate AtoZ]

82% of October Transactions Occurred Before the October 15 Measures
Three-Year Resale Restriction for Complexes Offered After the 16th...
Inevitable Decline in Available Units

After the announcement of the October 15 real estate measures, transactions involving pre-sale and occupancy rights have dropped sharply. Due to the reduction in loan limits, the burden of securing funds has increased, and with the strengthening of the mandatory residency requirement, it is expected that the decline in transactions will continue.

According to the Ministry of Land, Infrastructure and Transport's actual transaction price system on November 1, the number of pre-sale and occupancy rights transactions in October was 69, a 56% decrease compared to 157 in September. The transaction volume in October showed a clear difference before and after the policy announcement. Before the announcement (October 1-15), 57 transactions (82%) took place, but after the announcement (October 16-30), only 12 transactions (18%) occurred. The complexes with the most pre-sale and occupancy rights transactions in October were Prugio Radius Park (9 transactions), Mapo Xi Hillstate Rachels (7 transactions), and Imun IPark Xi and Olympic Park Foreon (6 transactions each).

After the policy announcement, prospective buyers of pre-sale and occupancy rights are facing increased concerns. For pre-sale rights from complexes offered before the October 15 measures, one resale is allowed before moving in. Additionally, if a buyer acquires a pre-sale right under the condition of taking over the interim payment loan, they must move in within six months after occupancy. For complexes that announced tenant recruitment after October 16, the day following the policy announcement, a three-year resale restriction is immediately applied. In regulated areas, the interim payment loan limit for pre-sale rights has been reduced from the previous 60-70% of the sale price to only 40%.

There are predictions that transaction volumes will decrease due to these regulations. This year, transaction volumes had been increasing compared to last year. According to Zigbang, the number of pre-sale right transactions in the first half of this year was 690, about twice as many as in the same period last year (350). This was an increase of 114 compared to the second half of last year (576). As of the end of October, the number of pre-sale right transactions in the second half of this year stood at 367.

Kim Jaekyung, head of ToMe Real Estate Consulting, explained, "Allowing only one resale of pre-sale rights can be seen as a measure to block speculative demand from those seeking premiums," adding, "From now on, only genuine buyers who have the ability to pay the balance will be able to apply, so transaction volumes are bound to shrink."

For those without a home who dreamed of homeownership through subscriptions, the entry barrier has risen due to loan regulations, making it more important to establish a thorough financial plan. Ham Youngjin, head of Real Estate Research Lab at Woori Bank, said, "It has become the norm for financial institutions to tighten credit, and mechanisms such as the total household loan limit and the application of stress rates have been put in place to offset the anticipated rate cuts," adding, "For those without a home, the ability to secure financing has become more important than the timing of purchase. Whether through auctions or pre-sale rights, it is necessary to adopt a strategy of seeking and purchasing properties with lower prices within the same area."