"150,000 vs 3"…Clear Polarization in the Subscription Market

[Asia Economy Reporter Yuri Kim] Amid concerns over a housing market downturn, polarization in the subscription market is becoming more pronounced. While some popular areas such as Seoul, Incheon, and Busan are seeing high subscription competition rates of several hundred to one, there are also complexes in provincial areas with only three applicants. Experts predict that as the real estate market contraction due to the novel coronavirus disease (COVID-19) intensifies, the temperature gap between popular and unpopular subscription areas will widen further.

According to Korea Real Estate Agency's Subscription Home and Real Estate 114 as of the 13th, among 55 complexes nationwide that conducted subscriptions up to the 10th of this year, 15 complexes, accounting for 27.27%, recorded subscription shortfalls. This means that 3 out of 10 complexes failed to meet subscription targets.

Looking at the subscription shortfall complexes, most were provincial apartments in areas such as Pyeongchang and Sokcho in Gangwon, Seogwipo and Jeju in Jeju Province, Geumsan and Dangjin in Chungnam, Eumseong in Chungbuk, Goheung in Jeonnam, and Muju in Jeonbuk. Eumseong Coaru in Eumseong-gun, Chungbuk, had only 3 applicants for 197 units supplied, resulting in a massive shortfall. This is the lowest competition rate this year. Small-scale complexes in the metropolitan area also experienced shortfalls. In last month's subscription, Paju Yeonpung Yangwoo Naeanae Ecoheim had only 46 applicants for 160 units supplied, showing a competition rate of 0.26 to 1.

On the other hand, there were 8 complexes that recorded high subscription competition rates of over 100 to 1. In Seoul, among three complexes, two recorded triple-digit competition rates: Magok 9 Complex in Gangseo-gu and Le El Sinbanpo in Seocho-dong, Seocho-gu (146.82 to 1). Apartments in major areas of Gyeonggi Province and large provincial cities such as Daegu and Busan also recorded high competition rates. Suwon Paldal-gu Maegyo Station Prugio SK View attracted the largest crowd this year, with 156,505 applicants for 1,074 units. Daegu Jung-gu Cheongra Hills Xi and Jung-gu Banwoldang Station Seohan Forest showed average competition rates of 141 to 1 and 119 to 1, respectively.

Experts foresee that polarization in subscription between popular and unpopular areas will become more distinct due to the prolonged COVID-19 situation and the resulting real estate market contraction. There are also concerns that unsold housing stock, especially in unpopular provincial areas, will act as a risk factor for the overall market.

According to the Korea Construction Industry Research Institute, as of December last year, unsold housing in eight provincial provinces totaled 35,549 units, which is over 10,000 units less than the peak in 2018. However, unsold units after completion during the same period were 12,931 units, showing a slow decline. This accounts for 36.4% of the total unsold housing. Researcher Huh Yoon-kyung of the Construction Industry Research Institute said, "The difficult regional economic situation and worsening housing market are likely to lead to rising delinquency rates and project financing (PF) insolvency," adding, "Measures such as deregulation related to the selection and management of unsold housing management areas are necessary."

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