"Even Apartments Under Price Ceiling System Won't Sell If Too Expensive"... Polarization in Paju's Pre-sale Market

[Image source=Yonhap News]

Even in areas where the price ceiling system for pre-sale apartments is applied, which maintained high competition rates despite the real estate downturn, a polarization phenomenon in subscription demand is emerging. In Unjeong New Town, Paju, Gyeonggi Province, where the price ceiling system is applied, apartments supplied at prices lower than market value still showed high subscription competition rates, but those priced higher than the market are being ignored by buyers.

According to Korea Real Estate Agency's Subscription Home on the 21st, ‘Unjeong New Town Woomeerin Park Hills,’ which held a first-priority subscription on the 19th, received 5,259 applications for 119 units, recording an average competition rate of 44.2 to 1. Both of the two types, including exclusive 84㎡ A and B, successfully closed the first priority subscription. The 84㎡ A (Other Gyeonggi) type recorded the highest competition rate of 184.3 to 1.

The affordable pre-sale price is cited as the key to the subscription success. Since this apartment was built on public land, the price ceiling system was applied, resulting in a pre-sale price lower than the surrounding market price. The highest pre-sale price for the exclusive 84㎡ apartment is 470 million KRW, under 500 million KRW. Considering that the nearby ‘Chorongkkot Village 13 Complex Dietre The First’ exclusive 84㎡ recently traded at 710 million KRW, buyers can expect a market price difference of over 200 million KRW. Additionally, the planned elementary school site near the complex and the possibility of walking to Chorong Elementary and Simhak Middle Schools are also reasons why subscriptions surged.

On the other hand, ‘Hillstate The Unjeong,’ which also held a first-priority subscription on the same day, received 481 applications for 685 units, resulting in an average competition rate of 0.7 to 1, falling short. This complex is located right in front of Unjeong Station on the Gyeongui-Jungang Line, a prime station area, and was expected to attract prospective subscribers due to the domestic first complex-integrated shopping mall, ‘Starfield Village,’ being established within the complex.

However, despite the application of the price ceiling system, the high pre-sale price compared to the surrounding market prices discouraged prospective subscribers. The pre-sale price for the exclusive 84㎡ units in Hillstate The Unjeong was set between 799 million KRW and 808.8 million KRW. Nearby, the asking price for the exclusive 84㎡ units in ‘Garam Village 7 Complex Hanla Vivaldi’ is around 520 million KRW. Even considering that Garam Village 7 Complex Hanla Vivaldi was completed in 2012, Hillstate The Unjeong is about 200 to 300 million KRW more expensive.

Although the upward trend in real estate prices in the metropolitan area has stopped, demand has concentrated on apartments where the price ceiling system is applied. This is because the lower pre-sale price allows for so-called ‘safety margin’ expectations. Especially, Unjeong New Town in Paju attracted prospective subscribers due to transportation benefits such as the Metropolitan Area Express Train (GTX)-A. However, experts analyze that with the combination of high interest rates and fatigue over rising pre-sale prices, a trend of scrutinizing ‘appropriate pre-sale prices’ is spreading even in areas where the price ceiling system is applied.

Park Jimin, head of the Monthly Subscription Research Institute, said, “The price ceiling system for private housing has effectively been abolished, and the supply of public housing under price control is limited, so new complexes subject to the price ceiling system have been popular. However, with recent sharp increases in loan interest rates and pre-sale prices, even with the price ceiling system applied, complexes with low profitability compared to nearby market prices will see poor subscription results.”

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