Short-term Traders Beware! Demand Surges for Apartments in Public Housing Sites

- Announcement on Strengthening Pre-sale Rights Transfer Restrictions in the Seoul Metropolitan Area and Provincial Metropolitan Cities to Enhance Housing Supply for Actual Demanders
- Prohibition of Pre-sale Rights Transfer in Overcrowding Control Zones and Growth Management Zones in the Seoul Metropolitan Area and Provincial Metropolitan Cities
- Public Land Sale Complexes Subject to Sale Price Ceiling System... Expected to Gain Benefits from Affordable Sale Prices

Recently, as complexes with subscription rates exceeding 20 to 1 have emerged one after another, the government has decided to restrict the resale of pre-sale rights to block speculative demand and increase the winning chances for genuine buyers.

On May 11, the government announced a revision to the Enforcement Decree of the Housing Act to strengthen the resale restriction period for houses supplied in private land areas within the metropolitan area’s overpopulation control zones and growth management zones, as well as urban areas of provincial metropolitan cities, extending the restriction until the registration of ownership transfer. Accordingly, from August onward, when the revision is expected to be completed, all apartments supplied in private land areas in these regions will be prohibited from reselling pre-sale rights.

As a result, construction companies preparing for pre-sale in these areas are under pressure. If resale of pre-sale rights is banned, the number of first-priority applicants may decrease, causing difficulties in sales.

In particular, until recently, the provincial metropolitan city pre-sale market, except for Suseong-gu in Daegu, was a non-regulated area where resale was possible six months after pre-sale, showing active movement. Even if the pre-sale price was relatively higher than the surrounding market price, genuine and speculative demand flocked, and premiums were added to pre-sale rights in transactions.

However, the supply in these areas will lose the advantage of “resale possible after six months” due to the strengthened resale restrictions, and will also fall behind in price competition with public land pre-sale complexes supplied under the price ceiling system.

▣ Expecting Spillover Benefits in Public Land Pre-sale Market

Until now, apartments pre-sold on public land have been subject to the price ceiling system, which prohibits resale of pre-sale rights, making it virtually impossible for investors aiming for resale to enter.

Although they have the advantage of being supplied at reasonable prices compared to surrounding market prices, due to low investment demand, they often recorded lower subscription rates than complexes supplied on private land. In fact, among the top 20 apartments nationwide by subscription rate from January to April this year, only 5 were on public land.

Of course, some public land sites have attracted significant attention. For example, Gapcheon Treepool City (Block 3) in Doan-dong, Daejeon, which was pre-sold in 2018, attracted as many as 169,000 first-priority applicants. Other provincial new towns and public land areas such as Sasong New City in Yangsan, Jinju Innovation City, and Jeonju Eco City have also recorded decent subscription rates over the past 2 to 3 years.

Real Estate Info research team leader Kwon Il said, “The biggest advantage of private land pre-sales in provincial non-regulated areas is fewer regulations. Because restrictions on re-winning and resale are relatively loose, many applicants gathered, and pre-sale prices steadily rose, increasing the burden on genuine buyers. However, if the ban on resale of pre-sale rights expands, the price merit will decrease and resale will be prohibited, so the public land pre-sale market, which applies the price ceiling system and offers relatively affordable prices, is likely to receive more attention.”

The complexes scheduled for pre-sale in major public land areas nationwide after May are as follows.

In the metropolitan area, LH is currently pre-selling 518 public housing units in the Godeok Gangil district in Seoul. In Okjeong New City, Yangju, Gyeonggi Province, Jeil Construction is pre-selling 1,228 units of Jeil Punggyeongchae, Hanshin Construction is preparing to pre-sell 767 units of Hanshin The Hue, and in Wirye New City, Hanam, Woomi Construction is preparing to pre-sell 420 units of Woomi Lin Phase 2.

In the provinces, Posco Construction and Taeyoung Construction plan to pre-sell 2,084 units of Sasong The Sharp Desiang Phase 2 in Sasong New City, Yangsan, Gyeongnam, around June. Additionally, new apartment pre-sales are expected within the year in public land districts such as Tangjeong District in Asan, Chungnam, and Naepo New City, Chungnam.

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