In the Seoul pre-sale market, the subscription results of the Gangnam area and non-Gangnam area are diverging. This is due to the application of the 'pre-sale price ceiling system' only in Gangnam’s three districts and Yongsan District. The 'pre-sale price ceiling system,' introduced to curb price increases, is generating 'lottery subscriptions' in specific areas, with profits reaching tens of millions of won.
According to the Korea Real Estate Board, a total of 40,635 people applied for first-round subscriptions for the 268 units of 'Raemian One Perla' on the 4th. The average competition rate reached 151.6 to 1. The previous day, 18,129 people applied for special supply for 214 units, recording an average competition rate of 84.7 to 1. Over the course of two days, a total of 60,000 people gathered for this apartment subscription.
This apartment is supplied through the housing reconstruction project in the Bangbae 6 area. It consists of a total of 1,097 units, ranging from 4 basement levels to a maximum of 22 floors. As the first pre-sale complex in the Gangnam area this year, high competition rates were expected even before the subscription. Even excluding its desirable location, profits of over 500 million won were anticipated. The sale price for the exclusive 84㎡ units of Raemian One Perla is between 2.2 billion and 2.4 billion won. An 84㎡ unit of the nearby 'Bangbae Grand Xi,' which was completed in 2021, was traded for 2.975 billion won on December 21 last year. Moreover, as it is a post-sale complex due to be inhabited in November, there is no residency obligation, allowing for profits to be gained quickly.
Last year, the subscription in the Gangnam area, where the pre-sale price ceiling system was applied, gained popularity. The first-round subscription competition rate for apartments sold in Gangnam's three districts last year was 289 to 1, about three times higher than the 102 to 1 rate across Seoul. The highest competition rate came from 'The H Daecheong Edelweiss,' sold in Daechi-dong, Gangnam District, which recorded an average competition rate of 1,025.56 to 1.
The pre-sale price ceiling system is a regulation that limits the sale price to 'land cost + construction cost.' It was implemented in response to controversies over high sale prices and market instability due to rapid increases in housing prices after the deregulation of sale prices in 1999. As of 2022, 309 buildings in 18 districts of Seoul, as well as 13 buildings in Gyeonggi including Gwacheon, Hanam, and Gwangmyeong, were designated as areas under the pre-sale price ceiling system. However, in January 2023, the government excluded all areas except the Gangnam three districts and Yongsan District from these designations as the real estate market slumped.
In areas where the pre-sale price ceiling system is not applied, pre-sale complexes are struggling, leading to open subscriptions. 'Changgyeonggung Lotte Castle Signature,' supplied through redevelopment of the Samseon 4 area in Seongbuk-gu, Seoul, recorded a subscription competition rate of 26.7 to 1 for its first-round subscription held last December. However, due to the cancellation of 45 subscriptions, an open subscription was conducted on the 3rd. The competition rate for this open subscription was recorded at 135.51 to 1. The sale price for the exclusive 84㎡ units of Changgyeonggung Lotte Castle Signature was set between 1.3205 billion won and 1.3900 billion won.
The 'Seoul One I-Park' in Wolgye-dong, Nowon District, 'Hillstate Deungchon Station' in Deungchon-dong, Gangseo District, and 'The Sharp First World' in Sangbong-dong, Jungnang District, held open subscriptions at the end of last month. These apartments, mainly of larger sizes with high sale prices, saw insufficient applications in the first and second subscriptions, leading to open subscriptions. The three apartments also sparked discussions regarding the 'high sale price' controversy. In the case of Seoul One I-Park, the sale price for the exclusive 84㎡ units was set around 1.4 billion won, while the sale prices for medium to large units such as 105㎡, 112㎡, and 120㎡ exceeded 1.6 billion won, resulting in insufficient applications.
Market analysts are criticizing that the 'pre-sale price ceiling system' is creating 'lottery subscriptions' in the Gangnam area, further polarizing the subscription market. This is because relatively low sale prices compared to market prices are set in high-demand areas, leading to a concentration of subscriptions. Han Young-jin, head of the Real Estate Research Lab at Woori Bank, noted, "Ironically, areas under the pre-sale price ceiling system have a large number of subscription waitlists and are being supplied at lower prices than surrounding market prices," adding that "initial subscribers are able to enjoy price differences, which leads to a problem where it is recognized as a 'lottery subscription,' attracting even more demand."