Tens of Thousands' 'Blind Subscription' Frenzy Shakes the 'Chopi' Market

Bid-Ask Price Extremes... "High Competition but Rare Transaction Success"

On the afternoon of the 26th, a view of apartment complexes in Eunpyeong-gu and Seodaemun-gu from Mapo-gu, Seoul.

"Although there are hundreds of thousands of subscription applicants and competition rates of hundreds to one are the norm, actual transactions are not being completed. Winners set their asking prices too high, and real buyers' purchasing sentiment has completely died due to loan regulations and other factors." (An official from real estate agency A in Magok-dong, Gangseo-gu, Seoul)

The speculative transaction market for income-generating real estate, which saw a nationwide subscription frenzy with the chance to earn tens of millions of won in price differences with just a few clicks, is freezing up. This is because the gap between sellers' and buyers' asking prices is too large, and real buyers' purchasing power has significantly decreased due to loan regulations and other factors.

According to the sales industry on the 27th, the lifestyle accommodation facility 'Hillstate Haeundae Central' will begin first-come, first-served sales for remaining rooms from 2 p.m. on the 28th. This complex, which recruited 238 units, received 108,392 applications over three days from the 15th to the 17th, showing an average competition rate of 455.4 to 1. Since resale is possible after paying a 10% deposit, investment demand poured in from across the country. Immediately after the winners were announced on the 20th, premiums for mid-level units formed between 10 million and 30 million won, and asking prices for high-level units reportedly soared to between 50 million and 80 million won. However, this atmosphere does not seem to have led to actual transaction completions.

A representative from real estate agency A in Magok-dong, who has conducted more than 10 speculative matching (brokerage between sellers and buyers) transactions for resalable real estate this year, said, "Since subscription applicants flock nationwide aiming only for speculative transactions, competition rates are historically high, but cases of immediate sell-outs are almost nonexistent." Most subscription properties require a subscription fee of about 3 million won, which is fully refundable. There is no penalty for canceling the contract after winning. He explained, "Those who win after overcoming competition rates of hundreds to one try to sell at high prices," adding, "Because the initial asking prices are excessively high, rumors spread quickly, killing buyers' purchasing sentiment instantly."

The situation with the residential officetel 'Hillstate Siheung Daeya Station,' conducted on the 18th and 19th, was not much different. Although 106,876 applicants competed for 150 units, recording an average competition rate of 712.5 to 1, brokers struggled to close deals easily. In some low-floor units, there were even buyers hoping for 'no premium (transactions at the original sale price)' immediately after the contract date. This means they would actually incur losses due to brokerage fees and other costs rather than gain premiums.

Another factor contributing to the transaction cliff is loan regulations. 'Dobong Lotte Castle Golden Park,' the last private rental apartment in Seoul this year and a resalable property attracting attention, failed to achieve a 'sold-out' title even a week after the official contract date, contrary to market expectations. Mr. C, who tried to buy the property by paying a premium, said, "The rental deposit is around 900 million won, but I was advised that it might be difficult to get a mid-term loan, and even then, concrete details will only be available in the second half of next year." He added, "In the worst case, I would have to gather 900 million won in cash within three years, and since I don't have the capacity to take on this property, I gave up on purchasing."

The possibility of a real estate market downturn also darkens the outlook for the speculative transaction market. Experts agree that "non-residential products such as officetels and lifestyle accommodation facilities are the first and most severely affected markets when the real estate market contraction begins in earnest." Seo Jin-hyung, president of the Korea Real Estate Society and professor at Gyeongin Women's University, said, "If you recklessly purchase and the market sentiment reverses, you may have to hold onto distressed properties for years," adding, "It is necessary to approach cautiously by considering the long-term housing market situation, including supply and demand in the area, as well as policy factors such as loan regulations."

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