[Pre-Subscription Guide & Effects] "30s Panic Buying Dispersion vs Jeonse Market Confusion Intensification"

Prequalification Review at Announcement of 3rd New Town and Seoul Early Subscription in July Next Year
30s Panic Buying Dispersed, Expectation of Housing Price Stabilization
Concerns Over Sharp Rise in Jeonse Prices Due to Subscription Waiting Demand

[Asia Economy reporters Moon Jiwon and Lee Chunhee] As the government finalized and announced the pre-sale plan for public housing in the Seoul metropolitan area on the 8th, a fierce subscription battle is expected to begin in earnest among non-homeowners aiming to secure affordable homes from the second half of next year.

In particular, since a large volume of 60,000 units will be released all at once within a short period of one and a half years, it is anticipated that the 'panic buying' among the 30s and 40s generation could be alleviated.

Pre-sale subscriptions basically require non-homeownership and residency in the relevant area, and depending on individual circumstances, applicants may also aim for special supply quotas for newlyweds, first-time homebuyers, and families with multiple children.

Estimated Sale Prices Provided During Pre-Sale... May Differ from Actual Sale Prices

Pre-sale announcements will be conducted sequentially by apartment complexes in each region starting next year. During the pre-sale, basic housing information such as location conditions, housing size (area), number of households, estimated sale price, and preliminary design plans, as well as schedules including the main sale period and expected move-in month, will be provided.

The actual sale price, subject to the price ceiling system, will be finalized at the main sale. Although there is a possibility that the estimated sale price and the actual sale price may differ depending on the rate of housing price increases, the government states it will "estimate so that there is almost no difference."

Pre-sale eligibility applies the same criteria as the main sale. Applicants must be members of a non-homeowner household, have a housing subscription savings account, and meet residency requirements in the relevant area. Special supply categories include newlyweds, first-time homebuyers, families with multiple children, and elderly parent support. Newlyweds must meet income requirements among those married within 7 years, prospective newlyweds, or single-parent families with children under 6 years old. First-time homebuyer special supply requires that no household member has previously owned a home.

Income and Other Eligibility Requirements Only Need to Be Met at Pre-Sale

Eligibility for pre-sale is assessed based on income, assets, and other criteria at the time of the resident recruitment announcement. In other words, even if the applicant no longer meets the requirements after winning the pre-sale, it does not matter. For example, since it usually takes 1 to 2 years from pre-sale to main sale, even if income increases beyond the standard or the marriage period exceeds 7 years, disqualifying newlywed status, it is still acceptable.

The mandatory residency requirement for priority supply remains in place. Applicants must be residing in the relevant area such as the Seoul metropolitan area to apply for pre-sale. However, the requirement only needs to be met by the time of the main sale.

For speculative overheated zones, 2 years of residency is required; for regulated areas, up to 1 year. In Gyeonggi Province, where the 3rd new towns are concentrated, 30% of supply is allocated to residents who have lived at least 1 year in the relevant city or county, 20% to those who have lived at least 6 months in Gyeonggi Province, and 50% to residents of the metropolitan area.

After winning the pre-sale, applicants may also apply for and win the general sale or purchase a home, but in that case, they cannot move into the home won through pre-sale. Final move-in eligibility is confirmed at the main sale, and re-winning restrictions apply. There is no penalty for not signing a contract.

Up to 50% of Supply Includes 'Medium-Sized Apartments' Desired by Buyers

A notable point in this pre-sale is that nearly half of the supply consists of medium-sized housing suitable for 3 to 4-person households. The Ministry of Land, Infrastructure and Transport plans to expand the proportion of homes sized 60 to 85㎡ in public sale complexes to about 30-50%. Currently, regulations limit the proportion of 60 to 85㎡ units in public sale complexes to no more than 15%, but there is a plan to revise this.

Accordingly, a significant number of medium-sized homes are likely to be included in the pre-sale supply. The Ministry also plans to develop floor plans that actively reflect residents' life cycles by expanding storage space up to 1.8 times compared to existing layouts, adding multi-purpose alpha rooms, and encouraging differentiated housing designs such as applying a 4-bay structure.

While Panic Buying Demand Will Be Dispersed, Concerns Over Jeonse Market Instability Remain

Experts believe that pre-sale subscriptions can reduce housing anxiety among non-homeowners and cause demand dispersion in the sales market, but they also foresee that the jeonse (long-term lease) market in the metropolitan area will become more unstable due to increased subscription waiting demand and residency requirements.

Park Wongap, Senior Real Estate Specialist at KB Kookmin Bank, explained, "An 'early home ownership effect' centered on pre-sale winners is expected to have some effect on stabilizing the housing market."

However, some point out that the housing price stabilization effect from pre-sale may not be as large as expected. Lee Eunhyung, Senior Researcher at the Korea Institute of Construction Policy, said, "30,000 units are about three times the number of complexes in Helio City, Songpa-gu, Seoul, but it is hard to say the real estate market will stabilize with just this amount."

There are also considerable concerns that the already unstable rental market will become more chaotic to maintain non-homeowner status before subscription in the 3rd new towns and other areas. Recently, with the implementation of the lease law, jeonse prices in the metropolitan area have soared, and if subscription waiting demand also accumulates, the jeonse shortage could worsen.

Ham Youngjin, Head of the Big Data Lab at Zigbang, said, "Non-homeowners aiming for 3rd new town sales staying in the rental market cause a continuous rise in jeonse and monthly rent prices, which is a concerning issue."

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