'Lotto Cheongyak' Also Disappears... Increasing Worries for the Homeless

Sale price can be set up to 90% of surrounding market price
"Are government-trusting non-homeowners being deprived of opportunity?"
National petition: "Loans are difficult, only cash-rich have a chance"

The view of Seoul from Namhansanseong on the 4th, when the government announced its 25th real estate policy.

The worries of non-homeowners who have been waiting for the opportunity to own a home through housing subscription are deepening. This is because apartment prices supplied in areas managed under price control can now be set up to 90% of the surrounding market price. It has become even more difficult to expect the so-called 'lottery subscription,' where apartments could be purchased at prices cheaper than the surrounding market.

The Housing and Urban Guarantee Corporation (HUG) announced on the 9th that it will fully improve the high-priced housing price review system starting from the 22nd. HUG decided to consider a certain percentage (85?90%) of the surrounding market price as the upper limit and reflect it in the price review.

The high-priced housing price review applies when a sales guarantee is issued in high-priced housing management areas designated by HUG. These areas currently almost coincide with the government-designated regulated areas. Accordingly, it is expected that the general apartment sale prices in parts of Seoul, most of Gyeonggi Province, and local areas will be significantly raised.

This measure has sparked strong opposition from non-homeowners. The increase in sale prices could further increase the burden on actual buyers trying to own a home.

Cheong Wa Dae National Petition Board Capture

On the 10th, a post titled "Allowing apartment prices in high-priced housing management areas to be set up to 90% of the market price wastes the waiting of non-homeowners" was uploaded on the Blue House public petition board.

The petitioner argued, "Allowing apartment prices in high-priced housing management areas to be set up to 90% of the market price deprives low-income non-homeowners who have waited a long time to purchase a home at a more affordable price."

He said, "(Even amid soaring real estate prices) non-homeowners have trusted the government's real estate policies and waited anxiously to purchase homes at more affordable prices."

He continued, "If apartments are sold at 90% of the market price, including option costs, there is a possibility that the total price could reach 100% of the market price. Who would wait 2 to 3 years to live in an apartment with resale restrictions that is only 10% cheaper than the market price when they could live immediately elsewhere?"

Furthermore, the petitioner pointed out, "If housing supply is insufficient and apartments are supplied at prices not much different from the market price, it is highly likely to lead to purchases of existing homes. Increased purchases of existing homes cause market prices to rise, and the resulting rise in sale prices creates a vicious cycle."

The petitioner added, "With loans for home purchases being more difficult than in the past, the rise in sale prices is a measure only for 'cash-rich' individuals, depriving low-income non-homeowners of opportunities to own homes more affordably." This post had received over 3,600 endorsements by the afternoon of the 13th.

The fact that sale prices are rising while loan regulations remain strict is also cited as a factor deepening the worries of non-homeowners.

The government reduced the loan-to-value ratio (LTV) for mortgage loans in speculative overheated districts and speculative areas such as Seoul to 40% through the August 2, 2017, measures. In the December 16, 2019, measures, the LTV for amounts exceeding 900 million KRW was reduced to 20%. Regulations on raising funds through unsecured loans have also been tightened since November last year.

If one does not have sufficient cash, even if they win a housing subscription, they may have to give up the subscription because they cannot prepare the intermediate payment.

Park Won-gap, Senior Real Estate Specialist at KB Kookmin Bank, said, "Allowing the upper limit up to 90% of the surrounding market price may cause sale prices to rise. For actual buyers, the burden of owning a home may increase further."

Meanwhile, areas where the private land sale price ceiling system is implemented are excluded from the high-priced housing price review. Currently, the private land sale price ceiling system applies to 309 buildings in 18 districts of Seoul (Gangnam, Seocho, Songpa, Gangdong, Yeongdeungpo, Mapo, Seongdong, Dongjak, Yangcheon, Yongsan, Seodaemun, Jung, Gwangjin, Gangseo, Nowon, Dongdaemun, Seongbuk, Eunpyeong) and 13 buildings in 3 cities in Gyeonggi Province (Gwangmyeong, Hanam, Gwacheon), totaling 322 buildings.

There are also forecasts that apartment prices in some metropolitan areas including the metropolitan area, Busan, and Daegu will rise significantly, potentially causing a price inversion phenomenon with major areas in Seoul where prices are controlled.

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