The Fever for Housing Subscription That Even COVID-19 Could Not Stop... Seoul Competition Rate at 76.6 to 1

Subscription competition rates rise and cut-off lines fall
Polarization also seen in pre-price ceiling subscription demand concentration

[Asia Economy Reporter Onyu Lim] Despite the spread of the novel coronavirus infection (COVID-19), the apartment subscription market in the first half of this year was fierce. With a high preference for newly built apartments and demand joining in due to concerns about reduced supply ahead of the implementation of the private land price ceiling system, subscription competition rates increased.

According to Zigbang on the 20th, the first-priority subscription competition rate in the first half of this year was 27.7 to 1 nationwide, 34.5 to 1 in the metropolitan area, and 19.9 to 1 in provincial areas. This is a significant increase compared to last year. In particular, the metropolitan area more than doubled compared to 16.6 to 1 in the second half of last year. Among them, Seoul recorded a first-priority subscription competition rate of 75.6 to 1. The second half of last year was 44.2 to 1.

The first-priority subscription shortfall rate decreased. The first-priority subscription shortfall rate was 9.5% nationwide, 6% in the metropolitan area, and 13.5% in provincial areas in the first half of this year, with both the metropolitan area and provincial areas decreasing by 13.4 percentage points and 11 percentage points respectively compared to the previous period. Ham Young-jin, head of Zigbang Big Data Lab, said, "Especially Seoul, Incheon, and Daejeon, which were popular in the first half, recorded a 0% first-priority subscription shortfall rate, reflecting the subscription enthusiasm."

Meanwhile, the average minimum score, which can be considered the subscription score cut-off, was actually lower in the first half of this year compared to the second half of last year. It was surveyed as 47.1 points nationwide (49.8 points in the second half of 2019), 48.8 points in the metropolitan area (51.5 points in the second half of 2019), and 44.4 points in provincial areas (47.6 points in the second half of 2019). This is analyzed to be because the winning score lines varied depending on the sale complexes. In February and May, perfect score applicants (84 points) appeared in ‘Maegyo Station Prugio SK View’ in Maegyo-dong, Paldal-gu, Suwon, and ‘Heukseok River Park Xi’ in Heukseok-dong, Dongjak-gu, Seoul, but there were also winning cases with single-digit scores in Busan (minimum 7 points) and Gyeonggi (minimum 8 points). Ham explained, "In complexes with good location and popularity, high-score applicants gathered, resulting in polarization even among complexes."

Looking at the first-priority subscription competition rate by price range, all price ranges except those under 200 million KRW increased compared to the previous period. The highest competition rate was recorded in the price range of 600 million to 900 million KRW, at 64.8 to 1. Next was over 900 million KRW at 37.1 to 1, 400 million to 600 million KRW at 34.7 to 1, and 200 million to 400 million KRW at 9.4 to 1. Apartments under 200 million KRW were supplied in some areas such as Gangwon, Chungnam, and Jeonbuk, but they did not close at first priority with a rate of 0.2 to 1.

The apartment with the highest first-priority competition rate in the first half was Bupyeong Station Hanla Vivaldi Treviang in Bupyeong-dong, Bupyeong-gu, Incheon, recording 251.9 to 1. It is a non-regulated area in the metropolitan area with good accessibility to Seoul, and interest was high due to favorable factors such as the planned establishment of the GTX-B line and the relocation of the US military base. The next highest competition rates were recorded by Ssangyong The Platinum Geoje Asiad in Geoje-dong, Yeonje-gu, Busan at 230.7 to 1, and Ssangyong The Platinum Haeundae in Jung-dong, Haeundae-gu, Busan at 226.5 to 1, both showing high competition rates exceeding 200 to 1.

In the metropolitan area, Gwacheon Jade Xi in Galhyeon-dong, Gwacheon-si, Gyeonggi, the first public sale apartment in Gwacheon Knowledge Information Town, recorded 193.6 to 1, and Dongtan Station Heriot in Osan-dong, Hwaseong-si, Gyeonggi, supplied at about half the surrounding market price despite being near a station, recorded 149.5 to 1, showing successful subscription results.

Due to the transfer of the subscription system at the beginning of the year (from the Korea Financial Telecommunications & Clearings Institute to the Korea Real Estate Board), no sales were conducted in January, and even after that, apartment supply was not abundant due to COVID-19, but the subscription market was hot. With high preference for newly built apartments among demanders and the supply of complexes called lottery subscriptions due to the Housing & Urban Guarantee Corporation (HUG)'s price review, demanders' interest increased further. Demand to avoid the price ceiling system scheduled for the end of this month also seems to have contributed to the heat of the first half sales market. Houses subject to the price ceiling system are expected to have low prices but burdensome conditions for demanders, such as a resale restriction of up to 10 years and a mandatory residence period of up to 5 years.

After the implementation of the price ceiling system, speculative demand aiming for short-term profits may decrease due to resale restrictions and reduced liquidity, but it remains to be seen whether the market will be reorganized mainly around actual demand. Ham predicted, "In regulated areas including the metropolitan area, mid-term loans are not possible (for prices exceeding 900 million KRW), so financial capacity is required, but on the other hand, the price reduction effect lowers the hurdle, so polarization where subscription demand concentrates on projects with good location and conditions and popularity is expected to continue."

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