While Apartment Sales Are Frozen Due to Bunsangje... The Counterattack of Urban-Style Residential Housing

Soaring Sale Prices... Sometimes More Expensive Than Apartments

As apartment sale prices are being held back by government controls, the prices of urban-style residential housing are rapidly rising, fueling an increase in housing prices. There are also repeated cases where urban-style housing within the same complex surpasses apartment sale prices, creating a reversal phenomenon.

According to the real estate industry on the 8th, Daewoo Construction opened a model house for the ‘Singil AK Prugio’ urban-style residential housing being developed in the 225-9 area of Yeongdeungpo-gu, Seoul, and plans to start subscription applications over two days from the 15th to the 16th. This complex consists entirely of small units under 50㎡: △49㎡ (exclusive area) A with 83 units △49㎡ B1 with 151 units △49㎡ B2 with 20 units △49㎡ C with 42 units. The set sale prices range from 844 million to 899 million KRW. This has sparked controversy over high sale prices when compared to ‘Yeongdeungpo Jaileune,’ which was sold in July last year with similar location and product composition. Jaileune’s 49㎡ units were priced between 548 million and 590 million KRW. In just one year, sale prices have jumped by about 60%.

Urban-style residential housing was first introduced in 2009 during the Lee Myung-bak administration to expand the supply of small urban housing at affordable prices for low-income households without homes and single- or two-person households. To enable rapid supply, measures such as noise prevention plans, minimum distance standards between buildings, and parking installation standards were exempted or relaxed. Since subscription savings accounts are not used, there are no restrictions on re-winning. Anyone aged 19 or older can apply regardless of home ownership or residence qualifications. Winners are selected by lottery rather than a point system, and there is no obligation for actual residence.

In September, the ‘SK View Terrace’ urban-style residential housing in Pangyo New Town, Seongnam, Gyeonggi Province, attracted 92,491 applicants, recording an average competition rate of 316.75 to 1. The sale price of this complex was set at an average of 34.4 million KRW per 3.3㎡, similar to nearby apartment market prices. The 12 units in the 3rd group (84T) received a staggering 27,739 applications, resulting in a historic competition rate of 2311.58 to 1. Despite the sale prices reaching 1.1 to 1.3 billion KRW, the controversy over high prices was unfounded.

Cases where urban-style residential housing within the same complex is more expensive than apartments are also emerging. A representative example is ‘Sewoon Prugio Hericity’ in Jongno-gu, Seoul, sold last year. The lowest sale price for a 24㎡ urban-style residential unit in the complex was 417.7 million KRW, nearly 50% higher than the 275.6 million KRW for an apartment of the same size.

Among the 10 most expensive housing units sold nationwide in the past five years, eight were urban-style residential housing. According to data analyzed by Democratic Party lawmaker So Byung-hoon through the Housing and Urban Guarantee Corporation (HUG) on 1,809 housing units sold since 2016, the most expensive housing per 3.3㎡ is the urban-style residential housing ‘The Sharp Banpo River Park’ in Banpo-dong, Seocho-gu, Seoul, priced at a staggering 79.9 million KRW. This is more than 25 million KRW higher per 3.3㎡ than the nearby apartment ‘Raemian One Bailey,’ which was sold this year at 52.8 million KRW per 3.3㎡.

Despite having lower product competitiveness compared to apartments, these unusual phenomena occur due to regulations. Seo Jin-hyung, president of the Korea Real Estate Society (professor at Gyeongin Women’s University), said, “Urban-style residential housing is excluded from the sale price management by the Housing and Urban Guarantee Corporation (HUG) and is not subject to the sale price ceiling system. Unlike apartments, the looser regulations continuously attract speculative demand, increasing pressure on sale price rises.”

Some suggest that until 2025, just before the full-scale supply of the 3rd new town, a ‘supply crevasse’ is inevitable, so the government should support the supply of apartment substitutes such as urban-style residential housing. Researcher Heo Yoon-kyung from the Korea Research Institute for Human Settlements said, “In the next 3 to 5 years, we need to actively consider supplying officetels and urban-style residential housing that can substitute apartment demand and be supplied quickly.”

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