Premiums Already Exceed 300 Million Won... Uncertainty Over 'Plus Premium' Deals for 3,600 Pre-Sale Rights [Real Estate AtoZ]

Transfer Restrictions Lifted for Six Complexes
Seoul One I-Park Sees Premiums Exceed 300 Million Won
Buyers Take a Wait-and-See Approach on Plus Premium Transactions

From December this year through January next year, the pre-sale transfer restrictions will be lifted on approximately 3,600 apartment units in Seoul. Some complexes are already seeing premiums added to their pre-sale rights. However, due to stricter lending regulations, it is expected to be difficult for buyers to secure funds, making actual "plus premium" (plfi) transactions unlikely.

Changgyeonggung Lotte Castle Signature bird's-eye view. Photo by Lotte Construction

According to real estate platform Zigbang on December 20, transfer restrictions on pre-sale rights will be lifted for six apartment complexes in Seoul, totaling 3,628 units (general sale supply) between December this year and January next year.

This month, transfer restrictions have already been lifted for five complexes: E-Pyunhansesang Dangsan River Park in Yeongdeungpo-gu (111 units), Seoul One I-Park in Nowon-gu (1,856 units), Hanshin The Hue High & Edu Foret in Geumcheon-gu (78 units), Hillstate Deungchon Station in Gangseo-gu (274 units), and Changgyeonggung Lotte Castle Signature in Seongbuk-gu (509 units). In January next year, 800 general sale units at The Sharp First World in Sangbong-dong are also set to have their transfer restrictions lifted.

For some complexes, buyers must pay a premium of several hundred million won to purchase pre-sale rights. The pre-sale rights for Seoul One I-Park have premiums exceeding 300 million won. For example, a 84-square-meter (34-pyeong) unit, considered the standard size, is being traded at 1.723 billion won, which is 350 million won higher than the original sale price. A 72-square-meter unit is listed for 1.4595 billion won, with a premium of 300 million won.

Hillstate Deungchon Station, where transfer restrictions were lifted on December 13, is also seeing premiums close to 200 million won. An 84-square-meter pre-sale right is trading at 1.55 billion won, with a premium of 170 million won. Although only one listing is currently on the market, local real estate agencies report that there have been multiple inquiries from sellers willing to add premiums of around 300 million won. Changgyeonggung Lotte Castle Signature, which had its transfer restriction lifted on December 17, is also receiving inquiries for transactions with premiums in the 300 million won range.

Due to a decrease in housing supply, pre-sale right prices are rising. Following the October 15 policy measures, gap investment listings have disappeared, and sellers who planned to upgrade have withdrawn their listings, resulting in fewer available properties for actual residence. However, actual transactions remain difficult. This is because the maximum limit for mortgage loans has been capped at 600 million won due to stringent lending regulations, reducing the buyers' ability to secure the remaining balance through loans.

Real estate agencies near the complexes where transfer restrictions have been lifted this month unanimously agree that there is a significant gap between the prices desired by buyers and sellers. A representative from a real estate agency near Changgyeonggung Lotte Castle Signature said, "Sellers are expecting at least 100 million won in profit, so they are considering premiums up to 300 million won after factoring in capital gains tax," adding, "On the other hand, buyers are hesitant to proceed with transactions, saying that anything over 100 million won is burdensome." A representative from a real estate agency near Seoul One I-Park also stated, "There are steady inquiries about purchasing pre-sale rights," but added, "The difference between the prices buyers and sellers want is so large that it is difficult for transactions to be actively concluded."

Experts have expressed similar views. Yoon Sumin, a real estate specialist at NH Nonghyup Bank, said, "The number of pre-sale right transactions is likely to increase due to the decrease in available properties for sale," but also explained, "Given the location preferences and the rate of apartment price increases in the area during the same period, the current premium prices seem excessive." He further noted, "In less desirable locations, it is expected that transactions will occur at lower premium prices through negotiations between buyers and sellers."