"Is It Wrong for Newlyweds to Live in a Spacious Home? Demand-Supply Mismatch"

Incheon Gyeyang 84㎡ Competition Rate 381 to 1
Clear Preference for Medium to Large Units in Pre-Subscription

On the 4th, citizens are applying for pre-subscription at the Seongnam Bokjeong 1 District pre-subscription office, a new housing site in Jangji-dong, Songpa-gu, Seoul.

The government, which is putting its life on stabilizing housing prices, is pushing for a ‘Dakgong (shut up and supply)’ policy, but the mismatch between the housing preferences and demands of the homeless and the supply is worsening. While the government is focusing its policy efforts on supplying small-sized housing aimed at newlyweds and young people to help them purchase their own homes, market demand is actually concentrating on medium-sized apartments.

According to the results of the first pre-sale district subscription released by the Ministry of Land, Infrastructure and Transport on the 13th, the subscription preference of demanders was concentrated more on medium-sized units than small-sized ones.

In the case of the Incheon Gyeyang district, where 709 units were supplied and about 37,000 people applied, the 84㎡ unit (exclusive area), known as the national standard size, recorded a competition rate of 381 to 1, far exceeding the average competition rate of 52.6 to 1. Only 28 units were supplied, but 10,670 applicants flocked. The 84㎡ corresponds to an apartment size of about 32 to 33 pyeong. This contrasts with the 59㎡ unit, which had a competition rate of 26.8 to 1, and the 74㎡ unit, which had 76.2 to 1. The situation in Namyangju Jinjeop 2 is no different. The 51㎡ unit had a competition rate of 3.8 to 1, the 59㎡ unit 10.1 to 1, while the 84㎡ unit reached 112.3 to 1.

The high competition rate for medium-sized apartments is analyzed to be partly due to the government increasing the proportion of small-sized units too much relative to medium-sized ones. In Incheon Gyeyang, for example, there were only 28 units of 84㎡, while 512 units of 59㎡ were supplied.

Because of this, although the government introduced the pre-sale subscription card to prevent panic buying by the 2030 generation, there are criticisms that it somewhat diverges from the preferences of demanders. The government’s supply policy is said to be stuck in standards from decades ago. Professor Ko Joon-seok, adjunct professor at Dongguk University Law School, said, "Compared to 20 to 30 years ago, the national income level has increased significantly," adding, "Looking at recent sales trends, the preference for medium to large-sized apartments has greatly increased." He also said, "Especially recently, due to COVID-19 and the establishment of remote work environments, demand for larger units has surged," emphasizing the need to reflect the current trends.

Consideration of the opportunity cost for real demanders in subscription is also important. In the case of private apartments, the winning cutoff score for the point system has soared, and to achieve a perfect score for the no-home ownership period, it actually takes at least 15 years. Special supply for newlyweds and first-time buyers is given only once in a lifetime. Considering that the re-winning restriction period is up to 10 years, the chance to win an apartment in popular areas is practically once in a lifetime. The fact that many applicants flocked to medium-sized apartments in the pre-sale subscription is also analyzed by the industry as reflecting demanders’ choice that ‘if it’s only once anyway, a larger unit is better.’

In fact, point system inflation is at an all-time high. Under the current 84-point maximum point system, the maximum score a no-home ownership family of four can get is 69 points. Meanwhile, the average winning score for apartments under 85㎡ in six places sold in Seoul this year was 67.17 points. Some complexes even had an average score of 74 points. Mr. K, who applied for an apartment in Incheon Gyeyang in this pre-sale subscription, said, "Although the quantity is relatively small, I felt it was a waste to use my subscription savings for a small apartment, so I ended up applying for the 84㎡ unit." The subscription savings used by pre-sale winners lose their validity after the main subscription is confirmed. If the pre-sale subscription is forfeited, participation in pre-sale subscription is restricted for one year.

There are also analyses that even 84㎡ is somewhat small for multi-child families. Legislative researcher Jang Kyung-seok said, "In the case of special supply for multi-child families with three or more children, generally 84㎡ housing with three rooms, a kitchen, and a living room is supplied," but pointed out, "However, this may be insufficient in area and space composition for families with three or more children of different genders."

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