"Residence Period Only Needs to Be Met by Main Subscription"... Will Pre-Subscription Move-Ins Concentrate in Hanam and Goyang?

Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance, is delivering opening remarks at the '6th Real Estate Market Inspection Ministers' Meeting' held on the 8th at the Government Seoul Office in Jongno-gu, Seoul. Photo by Kang Jin-hyung aymsdream@

[Asia Economy Reporter Lee Chun-hee] The government has unveiled detailed plans for the pre-subscription system introduced to curb 'panic buying.' Next year, all five 3rd phase new towns will accept pre-subscriptions, and the most notable residency requirement only needs to be met by the time of the main subscription.

On the 8th, Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance, held the '6th Real Estate Market Inspection Meeting of Related Ministers' at the Government Seoul Office and presented specific plans for pre-subscription, including the 3rd phase new towns.

Deputy Prime Minister Hong said, "Starting pre-subscription in July next year, we will expedite the sale of 30,000 public housing units each in 2021 and 2022 in major public land sites in the metropolitan area, including the 3rd phase new towns."

The target areas include all five 3rd phase new towns: Namyangju Wangsuk, Bucheon Daejang, Goyang Changneung, Hanam Gyosan, and Incheon Gyeyang, as well as large-scale inclusion of areas adjacent to Seoul such as Gwacheon, Noryangjin, and Namtaeryeong. However, Tae-neung Golf Course and Gwacheon Government Complex sites are excluded for now due to incomplete related procedures, with detailed plans to be announced later.

Pre-subscription is a method of accepting applications for some units 1 to 2 years before the main subscription. If selected in the pre-subscription, as long as the applicant maintains conditions such as being a non-homeowner until the main subscription, they are guaranteed 100% selection in the main subscription.

It takes place after the district plan approval stage in the public land development process, which typically proceeds as district designation → district plan approval → project approval → housing construction start → main subscription.

Pre-subscription is likely to be applied to public sale apartments. Unlike private sales, public sales select winners based on the amount paid into the subscription savings account rather than subscription points. The structure encourages steady monthly payments of up to 100,000 KRW into the subscription account to increase chances of winning. Recently, for public sales in the metropolitan area, it is analyzed that a payment amount exceeding 22 million KRW over more than 18 years is needed to be in a stable winning range.

Residence Period and Priority Supply Ratio (Provided by Ministry of Land, Infrastructure and Transport)

The residency requirement, which attracted the most attention, is based on the residence at the time of pre-subscription but must be fulfilled by the time of the main subscription.

Currently, in speculative overheated zones or large-scale land development districts over 660,000㎡, to be eligible for priority supply, one must have resided in the relevant local government area for more than 2 years to qualify for first-priority subscription in that area. For example, to qualify as a first-priority applicant in the Hanam Gyosan district pre-subscription, one must have lived in Hanam City, Gyeonggi Province for more than 2 years at the time of application.

However, for pre-subscription, it is sufficient to be residing in the area at the time of pre-subscription. The 2-year residency period can be completed by the time of the main subscription, which is 1 to 2 years later.

For public land subscriptions in the metropolitan area, subscription eligibility is granted not only within the local government but also across the entire metropolitan area including Seoul, Gyeonggi, and Incheon. However, applicants from outside the local government area have lower priority or a smaller allocation ratio compared to applicants from the local area, making winning less favorable.

For example, for the military site near Noryangjin Station where 200 units will be pre-subscribed in August to September next year, 50% or 100 units will be preferentially supplied to those who have lived in Seoul for more than 2 years by the time of the main subscription. The remaining 100 units will be allocated to other metropolitan area residents.

On the other hand, for the Hanam Gyosan district where 1,100 units will be pre-subscribed in November to December next year, 330 units (30%) will be supplied to residents who have lived in Hanam City for more than 2 years. Then, 220 units (20%) will be preferentially supplied to residents of other Gyeonggi areas with more than 2 years of residence. The remaining 550 units (50%) will be allocated to other metropolitan area residents.

Perspective view of Hanam Gyosan, the 3rd New Town, where preliminary subscription for 1,100 households is scheduled for November to December next year (Provided by the Ministry of Land, Infrastructure and Transport)

This is why there is a possibility of explosive growth in jeonse (long-term lease) demand targeting the 3rd phase new town subscriptions. In fact, the competition rates for complexes in Gwacheon Knowledge Information Town that held subscriptions this year showed overwhelming differences between local residents (Gwacheon City) and residents from other areas.

In July, the 'Gwacheon Prugio Bellarte' had an average competition rate of about 18:1 for local residents, while other Gyeonggi residents had 359:1 and other metropolitan area residents had 269:1, showing triple-digit average competition rates. Similarly, the 'Gwacheon Jade Xi' subscription held in March showed a maximum 15-fold increase in competition rates, with local residents averaging 32:1, other Gyeonggi residents 481:1, and other area residents 389:1.

Income and asset requirements will be assessed based on the pre-subscription time, not the main subscription. Even if the criteria are exceeded by the main subscription, no additional screening will be conducted.

All other conditions are set the same as the main subscription. Applicants must basically be non-homeowners and meet subscription savings account membership requirements. For special supply, qualifications such as newlyweds within 7 years of marriage, prospective newlyweds, or single-parent families with children under 6 years old apply, consistent with existing special supply criteria.

The biggest advantage of pre-subscription is that restrictions on re-winning do not apply, providing stable opportunities for genuine demanders. Normally, once a subscription savings account is used to win, whether the contract is signed or the win is forfeited, subscription to other housing is restricted for up to 10 years from the winning date.

However, pre-subscription winners are not subject to re-winning restrictions until the main subscription. Even if selected in pre-subscription, if better housing options appear within 1 to 2 years, applicants can freely apply for those. If they succeed in another subscription and give up the pre-subscription, there is no penalty.

However, if selected in pre-subscription, even if multiple pre-subscriptions are conducted over time, duplicate applications to other pre-subscriptions are not allowed.

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