900 to 1 in the 'Graveyard of Unsold Homes'... Private Rentals Stand Out in the Down Market

A bird's-eye view of the private rental apartment complex 'Daegu Hoban Summit Hive Park' located in the area of 725, Chilseong-dong 2-ga, Buk-gu, Daegu Metropolitan City.

Amid a housing sales transaction freeze and concerns over peak housing prices, demand related to housing is increasingly concentrating on private rental apartments. Even in Daegu, where unsold units are flooding the recent pre-sale market, a phenomenal situation has emerged with private rental competition rates approaching 900 to 1.

According to the pre-sale industry on the 22nd, ‘Daegu Hoban Summit Hive Park,’ which closed its subscription applications the day before, attracted over 100,000 applicants for a total supply of 446 households, recording an average competition rate of 240 to 1. For the 84㎡ (exclusive area) units in this complex, the subscription competition rate for applicants residing in other regions reached 877 to 1. Daegu is a place where the market has rapidly frozen due to recent oversupply, with 4 out of 5 pre-sale complexes this month experiencing undersubscription.

Private rental housing has recently been enjoying consecutive successes. ‘Jeju Aewol Namhae Onette’ in Aewol-eup, Jeju City, which closed subscriptions on the 6th of this month, attracted 219,124 applicants for 204 units. Some housing types recorded competition rates as high as 2,464 to 1. ‘Seoul Dobong Lotte Castle Golden Park,’ which closed applications on the 8th, did not have its subscription competition rate announced by the developer, but it is reported to have recorded an all-time high competition rate with hundreds of thousands of applicants. Last month, in Dongducheon-si, Gyeonggi-do, ‘Dongducheon Jungheung S-Class Hera City’ recorded an average competition rate of 357 to 1.

Private rental housing like these complexes is formally classified as ‘rental,’ so there is no tax burden such as acquisition tax, comprehensive real estate tax, or property tax, and long-term residence is possible for up to 10 years without worries about relocation. Real demand buyers concerned about falling housing prices can live stably and affordably in private rentals while weighing the opportunity to purchase. Some complexes also offer priority purchase rights to tenants after the rental period. Additionally, no subscription savings account is required, anyone aged 19 or older can apply, and these units are not counted as part of one’s housing stock. There are no resale restrictions, so if selected, tenants can transfer their lease rights and realize capital gains. It is an option that satisfies the demands of both real demand buyers and investors tired of various regulations and soaring housing prices.

However, there are cautions that ‘blind subscription’ for investment purposes requires careful consideration. A pre-sale industry official said, "Many investment demands enter private rental housing aiming for future pre-sale conversion and capital gains. However, it is necessary to be cautious as priority purchase rights may not be granted, or early conversion to pre-sale may occur before the rental period ends."

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