All Seoul Housing Sales, Only 210 Units by Lottery... "Low Scores and Switching Driving Up House Prices"

[Asia Economy Reporter Kim Yuri] This year, the number of apartments supplied in Seoul through the 'lottery system' for general sales was found to be only about 210 units. Considering the soaring competition rates for subscription, it has become virtually impossible for low-score applicants or one-homeowners in Seoul to expect to win new supply units. As the barrier in the subscription market rises, a vicious cycle continues where demanders are driven into the existing housing transaction market, pushing up housing prices.

According to Real Estate 114 on the 17th, the number of units with exclusive area over 85㎡ supplied in Seoul from the beginning of this year until the 10th was 3,290 units. Among these, the number supplied through general sales was only 423 units, about 12.86%. Considering that 50% of the units over 85㎡ are selected by a point system, the number of units supplied through the lottery system remained at 212 units.

The total supply (planned) in Seoul this year is 41,990 units. Since there will be almost no units over 85㎡ released by the end of the year, the proportion of lottery system units in the total supply in Seoul this year is about 0.5%. Even for non-homeowners, if the subscription savings account period and non-homeownership period are short and the number of dependents is small, the possibility of securing a home through new supply has virtually disappeared.

This is because most of Seoul's supply is provided through redevelopment projects, so there are not many units over 85㎡, and the general supply excluding union members is also decreasing. The number of units supplied through reconstruction and redevelopment this year is 24,058 units, which far exceeds half of the total supply. Considering that the total number of units supplied this year, 41,990 units, includes national rental, permanent rental, private rental, long-term lease, and Happy Housing, it means that a significant portion was supplied through reconstruction and redevelopment. Large-area supply through land development is also hard to expect, as there is no longer enough wide land in Seoul to supply sufficient housing.

It is also analyzed that the implementation of the private land price ceiling system following the Housing and Urban Guarantee Corporation (HUG)'s price regulation contributed to the decrease in lottery units. In some complexes in the Gangnam area, there were movements where union members tried to minimize losses by occupying large units at general sale prices set lower than the union member sale prices.

The fundamental cause is that the August 2, 2017 measures revised 100% of private housing units under 85㎡ in speculative overheated districts like Seoul to be selected by the point system. Demanders who had hoped for 25% lottery wins even in this area turned to existing stock. They lost chances to win under 85㎡ and the general supply over 85㎡ has significantly decreased.

The market diagnoses that in this situation, low-score applicants relying only on the lottery and one-homeowners looking to trade up are causing a vicious cycle that raises existing housing prices. It is also analyzed that the pre-subscription system the government will introduce from July next year, which includes a significant number of special supply units for newlyweds, is prompting waiting buyers who see no possibility or consider it a false hope to move. A redevelopment industry official said, "Relaxing special supply conditions cannot prevent existing market participants such as dual-income couples and one-homeowners looking to trade up, who have no chance of winning," and added, "Fundamental measures are needed beyond demand suppression such as subscription market reform."

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