Is 'Mafi' Becoming Full-Scale in the Seoul Metropolitan Area... Incheon Sees '-20 Million Won' Emergence

Lowest Ever First Half-Year Seoul Pre-Sale Rights Transactions
Steady Increase in Unsold Units in the Capital Region

Photo by Asia Economy

Due to the housing market slump, 'Mafi (Minus Premium)' listings, which previously appeared in some regional areas, are now increasingly emerging in the Seoul metropolitan area as well. Mafi refers to listings priced lower than the original sale price. This phenomenon typically occurs when the real estate market hits bottom.

According to the real estate brokerage industry on the 7th, a 59㎡ exclusive area pre-sale right for Apartment Complex A in Juan-dong, Michuhol-gu, Incheon Metropolitan City, was recently listed at 403.5 million KRW. This is 20 million KRW lower than the original sale price of 423.5 million KRW. This complex is a large-scale development with 2,054 households scheduled for move-in next February and is adjacent to a park. It recorded an average competition rate of 12.18 to 1 in the first-priority subscription on July 2020.

In Daegu Metropolitan City, which has become a 'graveyard of unsold units' due to an oversupply, Mafi listings are not hard to find; however, Mafi listings in the Seoul metropolitan area are somewhat unusual. With the deepening housing transaction cliff caused by interest rate hikes and widespread expectations of falling house prices, and the continued decline in housing prices, there is speculation that the pre-sale rights market in the metropolitan area is entering a full-fledged ice age.

Last month, Mafi listings appeared in the Gangnam area of Seoul. A 65㎡ exclusive area pre-sale right in Complex B, Ogeum-dong, Songpa-gu, Seoul, scheduled for move-in in January next year, was recently listed at a price 50 million KRW lower than the supply price (1.4726 billion KRW). This complex, which is not subject to the pre-sale price ceiling system, recorded an average competition rate of 2599 to 1 in January despite controversy over its 'bold sale price.'

◆Rapid Increase in Unsold Units in the Metropolitan Area... Seoul Pre-sale Rights Transaction Volume Hits Record Low

The transaction volume of pre-sale rights in Seoul has sharply declined to a record low. According to the Seoul Real Estate Information Plaza, the total transaction volume of apartment pre-sale rights (including move-in rights) in Seoul for the first half of this year (January to June) was 49 cases, marking the lowest first-half figure since statistics began in 2007.

The transaction volume of apartment pre-sale rights in Seoul peaked at 5,763 cases in the first half of 2017 and has been declining since. It dropped sharply to 1,493 cases in 2018, 945 in 2019, 480 in 2020, and 157 in 2021.

Unsold units are also increasing nationwide. According to the Ministry of Land, Infrastructure and Transport, the total number of unsold houses reached 31,284 units by July this year, an increase of 12.1% (3,374 units) from the previous month. Unsold houses bottomed out at around 14,000 units in October-November last year and have been increasing monthly since. In particular, unsold houses in the metropolitan area surged threefold from 1,509 units at the end of last year to 4,528 units in July over seven months. 'Post-completion unsold units,' which are considered 'malignant unsold' because they remain unsold even after construction is completed, totaled 7,388 units nationwide, up 3.6% from the previous month.

An industry insider said, "All areas that serve as leading indicators of the real estate market, including the pre-sale rights market, show no signs of escaping the slump," adding, "Considering the likelihood that the transaction cliff and price decline will continue for the time being, Mafi listings may proliferate in some metropolitan areas that saw sharp price increases last year."

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