Mixed Emotions Over Songdo Sales at '900 Million'

This Month, 'The Sharp Songdo Ark Bay' Attracts 20,000 Applicants with a Competition Rate of 47 to 1
Exclusive 98㎡ Units Priced Below 900 Million KRW... Interim Payment Loans Available

There are concerns that the fortunes of the Incheon Songdo International Business District pre-sale market are being divided by the mid-payment loan regulation threshold of "900 million KRW." Just over two months ago, a large-scale non-contracting incident occurred, but this time, a contrasting situation has emerged with the largest number of applicants ever recorded in the area.

According to the Korea Real Estate Agency's Subscription Home on the 11th, 22,848 people applied for 486 units of the general supply of "The Sharp Songdo Ark Bay," which went on sale in Songdo, Incheon on the 5th of this month, resulting in an average competition rate of 47 to 1. This is the largest number of applicants for any complex sold in Songdo to date. In particular, 15,622 people applied for 74 units of the 98㎡ (exclusive area) apartments, pushing the competition rate up to 211 to 1.

This contrasts with the subscription results of "Songdo Xi The Star," which was sold in the same area two months ago in November. Although the first-priority subscription competition rate for Songdo Xi The Star was double digits at 13 to 1, 35% of the winners later gave up their contracts. They accepted the disadvantage of being restricted from winning again for 10 years upon contract cancellation.

Some analysts say that despite the large-scale non-contracting in the previous complex, the fact that more than 20,000 applicants flocked to The Sharp Songdo Ark Bay is because mid-payment loans were available. As part of housing demand policies, since July 2016, the government has prohibited mid-payment group loans guaranteed by the Housing and Urban Guarantee Corporation (HUG) for apartments priced over 900 million KRW.

In the case of The Sharp Songdo Ark Bay, the 84㎡ units (priced between 771.5 million and 800 million KRW) as well as the larger 98㎡ units are priced at 899 million KRW, allowing mid-payment loans. On the other hand, Songdo Xi The Star's average price for 84㎡ units was in the mid-900 million KRW range, with a down payment of 20% of the sale price. It is reported that buyers felt burdened by the loan restrictions and gave up their contracts. However, GS Construction plans to proceed with mid-payment loans guaranteed by the company.

A GS Construction official stated, "It is understood that buyers who could not secure down payments due to ineligibility and inability to obtain unsecured loans gave up their contracts," adding, "We plan to proceed with mid-payment loans guaranteed by the company for properties priced over 900 million KRW."

Some believe that the possibility of securing funds through loans has become a key factor determining the success or failure of pre-sales. Since resale of pre-sale rights is also prohibited in regulated areas, buyers lacking sufficient personal funds find it practically impossible to apply for complexes priced above the mid-payment loan prohibition threshold.

Meanwhile, with loan regulations tightening from this year, including the inclusion of apartment mid-payment and final payment loans in the borrower's total debt service ratio (DSR) calculation, there are forecasts that the subscription market will shrink. According to a survey by Real Estate R114, among 707 housing types sold nationwide in the fourth quarter of last year, 117 experienced undersubscription, accounting for 16.5% of the total.

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