Queueing Ahead of Price Ceiling... Subscription Frenzy Predicted

[Asia Economy Reporter Kim Yuri] The overheated apartment subscription market in Seoul is expected to continue in the second half of the year. This is because new supply is expected to follow one after another ahead of the expiration of the private land price ceiling system exemption at the end of July. There are concerns that if the price ceiling system is implemented, the sale prices will actually drop further, fueling subscription overheating.

According to Real Estate 114 and others on the 16th, until next month before the implementation of the price ceiling system, approximately 25,431 apartment units are expected to be released onto the market in Seoul. Currently, apartments such as Nowon Lotte Castle Signature in Sanggye-dong, Nowon-gu (1,163 units), Raemian Elinity in Yongdu-dong, Dongdaemun-gu (1,048 units), Lotte Castle River Park Signature in Jayang-dong, Gwangjin-gu (878 units), Dunchon Jugong in Dunchon-dong, Gangdong-gu (12,032 units), Jeungsan 2 District in Jeungsan-dong, Eunpyeong-gu (1,386 units), Susaek 6 District in Susaek-dong, Eunpyeong-gu (1,223 units), Cheonho 1 District in Cheonho-dong, Gangdong-gu (999 units), and Jugong 1 Complex in Gaepo-dong, Gangnam-gu (6,702 units) are preparing for sale. Even excluding Dunchon Jugong, which is having difficulties negotiating prices with the Housing and Urban Guarantee Corporation (HUG), the volume exceeds 13,000 units. The concentration of supply in the summer, which is usually considered an off-season, is due to major complexes postponing their sales schedules because of the COVID-19 pandemic and rushing projects to avoid the price ceiling system.

The subscription competition rate in Seoul in the first half of the year already approached 100 to 1. The average subscription competition rate for eight sites in Seoul that conducted subscriptions until the 11th of this year was 99.3 to 1. Half of these eight sites exceeded a competition rate of 100 to 1. The public sale at Magok District 9 in Magok-dong, Gangseo-gu recorded the highest subscription competition rate in Seoul during this period at 146.8 to 1, followed by Hoban Summit Mokdong in Sinjeong-dong, Yangcheon-gu (128.1 to 1), Le El Sinbanpo in Jamwon-dong, Seocho-gu (124.8 to 1), and Le El Sinbanpo Park Avenue in Jamwon-dong, Seocho-gu (114.3 to 1), all showing triple-digit competition rates.

Other complexes also had competition rates in the tens to one range. Heukseok River Park Xi in Heukseok-dong, Dongjak-gu nearly reached 100 to 1 with 95.9 to 1, and non-Gangnam areas such as Ujangsan Forest I-Park in Hwagok-dong, Gangseo-gu (66.2 to 1) and Gaepo Presidents Xi in Gaepo-dong, Gangnam-gu, which completed its sales schedule earlier this year (65.0 to 1), also exceeded 60 to 1. The small-scale sale of 58 units at Deungchon Station Hanul H Valleyum recorded 12.1 to 1. The overheating phenomenon in Seoul’s subscription market has intensified since the rapid rise in housing prices in 2018. The average subscription competition rate in Seoul was 12.6 to 1 for 47 complexes in 2017, then rose to 30.4 to 1 for 31 complexes in 2018, 31.7 to 1 for 56 complexes in 2019, and reached 99.3 to 1 in the first half of this year.

The metropolitan area also recorded a rate more than twice as high as the provinces, at 40.7 to 1 compared to 18.3 to 1 in the provinces. This is the first time since 2010 that the average subscription competition rate for apartments in the metropolitan area has surpassed that of the provinces. After the December 16 measures at the end of last year, a balloon effect occurred in Gyeonggi and Incheon, which have good accessibility to Seoul. Not only investors and speculators but also genuine buyers who found it difficult to secure a home in Seoul engaged in 'blind subscriptions.'

Experts expect the Seoul subscription market to heat up further around the implementation of the price ceiling system. This is because most units are priced lower than market prices, allowing winners to expect several hundred million won in capital gains, and signs of a rebound in housing prices are stimulating the purchasing sentiment of homebuyers. Kyunghee Yeo, Senior Researcher at Real Estate 114, said, "Interest in the subscription market is expected to increase further around the implementation of the price ceiling system in the second half of the year," adding, "In the metropolitan area as well, demand is likely to flood the subscription market as buyers try to secure sale rights that can be resold ahead of the strengthened resale restrictions in August."

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