From 'Wijangjeonip' to 'Cheongyaknanmin'... Where Is the Troubled New Town Pre-Subscription Headed?

[Asia Economy Reporter Ryu Tae-min] The government has decided to proceed with the third phase of new town pre-subscription as planned from the 16th of this month, and the pre-subscription period is approaching. However, land compensation procedures are expected to face difficulties, raising widespread skepticism in the market about potential delays in the plan. Additionally, since the sale prices of apartments subject to pre-subscription are set at about 60-80% of market prices, there are concerns about illegal and illicit activities such as false address registration aimed at 'lottery-winning.'

Growing Resident Opposition Due to LH Scandal... Will Land Compensation Delays Cause Housing Supply Postponements?

Pre-subscription is conducted 1-2 years ahead of the main subscription, which takes place before construction begins. After pre-subscription, the main subscription proceeds, followed by the start of move-ins. However, with inevitable delays in the new town projects, conducting pre-subscription as planned could result in significant postponements of both the main subscription and actual move-ins, causing 'false hope' for pre-subscription winners.

Earlier this year, the Korean Land and Housing Corporation (LH) speculation scandal intensified resident opposition in the planned sites for the third phase new towns, increasing the likelihood of project delays. In Hanam Gyosan, residents' opposition has prevented even the start of surveys on obstacles. In Incheon Gyeyang, residents have demanded a re-evaluation of land appraisals, and in Namyangju Wangsuk, conflicts between LH and residents over appraisals have grown, leading to expectations that land compensation will be delayed beyond the original schedule.

Accordingly, if the main subscription schedule is delayed for a long time, a large number of 'subscription refugees'?those who won pre-subscription but have nowhere to go?may emerge. This is because pre-subscription winners must maintain their non-homeowner status until the main subscription. If the main subscription is not conducted within 1-2 years after pre-subscription as planned by the government and is postponed indefinitely, they will be forced to continue renting without options.

In fact, during the 2009-2010 public housing promotion, in areas such as Guri Galmae, Bucheon Ok-gil, Siheung Eun-gye, and Hanam Gam-il, land compensation delays caused by resident opposition led to main subscriptions being conducted 5-8 years later than initially planned at the time of pre-subscription. Especially in Hanam Gam-il district, move-ins occurred 10 years after pre-subscription winners were announced. As move-ins were postponed indefinitely, more than half of the pre-subscription winners gave up on the opportunity to own a home. According to LH and the office of Yoon Kwan-seok of the Democratic Party of Korea, among 13,398 pre-subscription winners at that time, only 5,512 (41.1%) actually received housing supply.

To Meet ‘Resident of the Area’ Condition... Surge in False Address Registrations Within Subscription Areas

Moreover, ahead of pre-subscription, movements to register false addresses in local goshiwons (small dormitory-style rooms) and one-room apartments have been detected. On online communities specializing in renting one-room apartments and goshiwons, posts seeking goshiwons in Seongnam, Incheon, and Namyangju?where non-residents can register their addresses?have recently surged. As the start date for the third phase new town pre-subscription approaches, a 'last-minute demand' has gathered to meet the residency requirement for subscription applicants.

In fact, even without actual residence, simply registering an address can fulfill the residency condition, significantly increasing the chances of winning. For the third phase new town subscription, in Gyeonggi Province, 30% of supply is given first priority to residents who have lived in the relevant city or county for over one year, followed by 20% second priority to Gyeonggi residents with over six months of residence, and third priority to residents of the metropolitan area. Even if applicants fail in the higher priority subscription, they are included in the next priority selection, giving local residents up to three chances to win.

Furthermore, the local resident category has relatively lower competition rates and score cutoffs compared to other categories. Jeong Ji-young, CEO of I'm Happy, a subscription expert, said, “The local resident category requires on average about 10 points lower in winning scores than the 2nd and 3rd priority categories, which is equivalent to saving more than three years of subscription account membership.”

However, since false address registration is a clear illegal act, if caught, the housing supply contract will be canceled, and offenders may face imprisonment of up to three years or fines up to 30 million won. Additionally, subscription application eligibility will be restricted for 10 years thereafter.

In fact, the Ministry of Land, Infrastructure and Transport detected a total of 499 cases of fraudulent subscriptions during inspections of complexes sold last year and referred them for investigation. Among these, 191 cases involved false address registration. The Ministry announced on the 25th of last month that it plans to conduct intensive inspections for fraudulent subscriptions targeting complexes sold in the first half of this year starting this month.

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