[Practical Finance] 'Dongchun' Pre-sale Circus... 55,000 Households Supplied in the Seoul Metropolitan Area from February to April

Dunchon Jugong Reconstruction 12,032 Units... 4,786 Units for General Sale with Various Housing Types
Under HUG Regulations, Mid-term Loan Possible for 84㎡ Units Priced Below 900 Million KRW 'Lotto'

895 Units Supplied in Wirye New Town, Gyeonggi... 1,231 Units Prepared in Gwacheon Knowledge Information Town

[Asia Economy Reporter Lee Chun-hee] 'The longer the wait, the hotter it gets.' This is the market outlook for new housing supply in the Seoul metropolitan area between late winter and early spring. After a month-long pause, a surge of supply is expected over the next three months.

The term "pause" refers to the suspension of all housing subscription services during January as the housing subscription operations were transferred from the Korea Financial Telecommunications & Clearings Institute to the Korea Real Estate Board. However, starting next month, housing subscription services will resume under the new system operated by the Korea Real Estate Board.

In particular, the housing market from February to April is expected to heat up more than ever. This is because the grace period for applying the private land price ceiling system to redevelopment and reconstruction projects is set to end on April 28. Although the Korea Housing & Urban Guarantee Corporation (HUG) continues to regulate high prices, under the price ceiling system, prices are likely to be set lower, prompting more projects to rush to launch sales before the grace period ends to secure profitability.

According to Real Estate 114, a total of 54,851 housing units are scheduled to be supplied in the metropolitan area by April. Especially in the 13 districts of Seoul where the price ceiling system applies (Gangnam, Seocho, Songpa, Gangdong, Yeongdeungpo, Mapo, Seongdong, Dongjak, Yangcheon, Yongsan, Gwangjin, Seodaemun, Jung) and five other districts including Gangseo, Nowon, Dongdaemun, Seongbuk, and Eunpyeong, 8 complexes totaling 21,111 units will be supplied across 37 neighborhoods.

▲ Expected sale price of Dunchon Jugong as of December 9 last year and actual transaction prices of nearby complexes

◆ Seoul: Target Dunchon Jugong, a 'once-in-a-lifetime opportunity' = In Seoul, 21,415 units are scheduled to be supplied by April. The most attention is on the Dunchon Jugong reconstruction project, known as the "largest reconstruction project since the founding of Korea." Originally a large complex of 5,930 units, it will be reborn as a mammoth complex of 12,032 units, roughly doubling in size through reconstruction.

Industry insiders say, "Given the current subscription market conditions, Dunchon Jugong is a rare opportunity that may not come again." This is because, amid soaring subscription competition rates and scores, the results of Dunchon Jugong's subscription are expected to be unusually remarkable.

The recently confirmed general supply for Dunchon Jugong is 4,786 units. Considering that general supply units in Seoul's reconstruction projects usually number fewer than 200, this is an unprecedented volume. Due to the large supply, some speculate that competition rates might be surprisingly low. Even if 23,565 people applied for the 'Songpa Signature Lotte Castle,' which had the highest number of applications in Seoul last year, the competition rate for Dunchon Jugong would not reach the 6:1 threshold for first-priority subscription closure. Even if 100,000 people apply, the competition rate would only be about 20:1.

The variety of housing types is also diverse. The 84㎡ units, with 1,237 units available for general supply, come in 8 types, and the 59㎡ units, with 1,488 units, come in 5 types, totaling 17 different types of units offered for general supply. As applicants are dispersed, low-score applicants can increase their chances by targeting less popular housing types. The availability of many micro-sized units, such as 1,150 units of 39㎡, also presents an opportunity for single-person households who have been disadvantaged in the point-based subscription system.

Additionally, if the general supply price is set at around 26 to 27 million KRW per 3.3㎡ due to HUG's high-price regulation, which effectively acts as a price ceiling, the price for an 84㎡ unit is likely to be set below 900 million KRW. This means easier financing is possible through mid-term group loans. Even if the price is set at the union's target of about 35.5 million KRW per 3.3㎡, it remains attractive since the surrounding market price already exceeds 40 million KRW per 3.3㎡.

Besides Dunchon Jugong, Seoul will see other supplies such as 1,772 units in Heukseok 3 District, Dongjak-gu (364 general supply units) in March, 998 units at Hillstate Sewoon in Jung-gu (899 general supply units), and 740 units in Yeokchon 1 District reconstruction in Eunpyeong-gu (444 general supply units). There is also a possibility that the integrated reconstruction of Sinbanpo 3rd and Gyeongnam Apartments in Banpo-dong, Seocho-gu, originally planned for a full sale with 2,971 units (356 general supply units), and Hoban Summit Mokdong in Yangcheon-gu with 407 units (240 general supply units) might avoid the price ceiling regulation.

◆ Gyeonggi: Aim for the 'last ride' in Wirye and 'designated targets' = In the Gyeonggi region, private land price ceiling system units are scheduled to be supplied after April, but public land price ceiling system units are waiting.

The area with the most housing supply is Wirye New Town. In the northern Wirye Gyeonggi area, 475 units of 'Jungheung S-Class' in A3-10 block and 420 units of 'Woori Lin 2nd' in A3-2 block in Hakam-dong, Hanam City, are about to be supplied. Since these two complexes are public land supply housing, the price ceiling system applies.

Once these two complexes finish their supply, the decade-long supply journey of Wirye New Town, which began in 2011, will conclude. Since subscription is possible throughout the metropolitan area and the recently completed 'Hoban Summit Songpa' attracted 34,824 applicants, this subscription is also expected to be fiercely competitive with high winning score cutoffs.

Sales are also set to begin in Gwacheon Knowledge Information Town, which has attracted much attention from buyers. The S6 block 'Jade Xi' with 647 units is planned for supply next month, and the S5 block 'Gwacheon Desiang' with 584 units will also soon enter the market.

Kim Eun-jin, research team leader at Real Estate 114, advised, "While the price competitiveness will increase as prices are lowered under the private land price ceiling system, various conditions such as resale restrictions and mandatory residence periods will become stricter. Given concerns about new supply contraction, it is necessary to actively consider subscriptions for previous supply rather than waiting for the price ceiling system to be implemented."

This content was produced with the assistance of AI translation services.