Housing Transactions Decline, Cold Wave Hits Booryuji Market as Well

Prime Gangnam Area Properties Face Consecutive Auction Failures
Holding Firm with High Prices for Now

[Image source=Yonhap News]

[Asia Economy Reporter Kim Hyemin] As housing demand cools down, the reserved lot market is also experiencing a cold spell. Despite repeated failures to sell, the associations have not lowered prices, causing buyers' interest to wane. This has led to a standoff between homeowners who refuse to lower asking prices and buyers who have turned cautious, extending into the reserved lot market.

According to the maintenance industry on the 18th, most reserved lot sales in major Seoul complexes this year have gone through re-auctions. Even prime properties in the Gangnam area, where demand for a single smart home is concentrated, are no exception. For example, all five units of ‘The H Banpo La Class,’ a reconstruction of Samho Garden Phase 3 in Gangnam-gu, failed to sell last month, and only one unit was sold through a recent re-auction. ‘Raemian Leaders One,’ a reconstruction of Woosung Phase 1 in Seocho-dong, Seocho-gu, has attempted reserved lot sales three times this year alone, but some units have yet to find owners.

Reserved lots refer to the supply units that associations keep in reserve during redevelopment or reconstruction processes to prepare for unforeseen future circumstances. Sales of reserved lot units occur after move-in but before the association is liquidated.

Until last year, reserved lot units were as hot as the general market. Because supply within Seoul was scarce, demand for reserved lot sales was high. For instance, in October last year, an 84㎡ (exclusive area) unit at Forena Nowon in Nowon-gu was sold at 1.35999 billion KRW, nearly 200 million KRW above the minimum bid price of 1.19 billion KRW.

However, recently, as buying demand has weakened, reserved lot minimum bid prices have risen to market levels, leading to repeated failures to sell. Unlike general sales, associations set the prices for reserved lots, and it was common to set prices lower than market value. But this year, despite repeated failures, they have been holding out by maintaining prices similar to market value.

Some have even raised prices. For example, in the case of Godeok Lotte Castle Bene Luce, a reconstruction of Godeok Jugong Phase 7 in Gangdong-gu, a re-auction notice was issued on the 11th for three unsold units, raising the minimum bid price by up to 150 million KRW compared to before. Raemian Leaders One also raised the price of an unsold 114㎡ unit from 3.2 billion KRW to 3.3 billion KRW, and in the third auction notice, up to 3.5 billion KRW.

An official from the sales industry said, "Many associations seem to be in no hurry, thinking they only need to sell reserved lots before the association is liquidated," adding, "Reserved lot sales tend to follow market trends, so this situation is likely to continue for a while."

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