"The Counterattack of the Price Ceiling System"…Deepening Sale Cliff and Point Inflation

Archive photo / Photo by Mun Ho-nam munonam@

[Asia Economy Reporter Yuri Kim] The heated Seoul apartment pre-sale market has come to a 'temporary halt' due to the implementation of the private land pre-sale price ceiling system. However, with the cut-off score for winning apartments under the point-based system already exceeding 60 points, it is expected that competition for subscription will intensify further due to reduced supply and lower pre-sale prices.

According to Real Estate Info on the 31st, the general pre-sale volume in Seoul next month is expected to be only 153 units. Compared to 1,995 units supplied during the same period last year, this is a sharp decrease of 92.33%. The only subscription complex in Seoul in September is 'Sinmokdong Paragon,' a reconstruction project of Sinwol 4 District in Sinwol-dong, Yangcheon-gu.

According to Realtoday, the lowest subscription score among winners in 13 apartment complexes pre-sold in Seoul in July and August averaged 60.6 points. This is an increase of 4.7 points from the first half average lowest score of 55.9 points. The subscription score is the sum of the highest possible points of 84, which includes the period of no home ownership (32 points), number of dependents (35 points), and subscription account subscription period (17 points). This means that to surpass the winning cut-off score, one must have been without a home for over 12 years (age 42 or older), have three or more dependents (a family of four), and have a subscription account for over 15 years.

The industry expects this 'point inflation' to deepen after the implementation of the pre-sale price ceiling system. Under the price ceiling system, additional conditions such as mandatory residence will be applied to general pre-sale winners from February next year, but since the subscription market has already been reorganized around no-home-ownership and actual residence, waiting applicants are expected to focus more on the lower pre-sale prices and reduced supply. The market expects that under the price ceiling system, pre-sale prices will be 5-10% lower compared to the high pre-sale price review by the Housing and Urban Guarantee Corporation (HUG). A reduction in supply itself means that even applicants with high subscription scores may face narrower chances of winning.

The average competition rate and winning subscription scores are likely to rise further. In July and August this year, when a rush of pre-sale units was pushed out before the price ceiling system, 249,646 subscription accounts competed for 3,922 general pre-sale units. The average subscription competition rate reached 63.7 to 1. Although this is slightly lower than the average competition rate of 74.6 to 1 recorded in the first half of this year when 181,294 people competed for 2,430 units, this is due to market conditions such as overlapping pre-sale schedules caused by a sudden increase in pushed-out units within a short period.

The subscription competition rates for individual complexes have also consecutively set new records. 'Daechi Prugio Summit (Gumaeul 1 District Reconstruction)' in Daechi-dong, Gangnam-gu recorded an average competition rate of 168.1 to 1, followed by 'DMC SK View I-Park Foret (Susaek 13 District Redevelopment)' in Susaek-dong, Eunpyeong-gu, which recorded 340.3 to 1, setting a new Seoul record since subscription applications began to be processed electronically.

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