"'Precious Jeonse'... Hanam's Pre-Subscription Demand Pushes Prices Up 200 Million Won (Comprehensive)"

Rapid Surge After May Pre-Subscription Announcement
Hanam, Namyangju See 'Jeonse Zero' Cases Multiply
Hanam Pungsan-dong New 30-Pyeong Units Near 900 Million KRW

Due to Subscription System Characteristics, Residents in Area Have Advantage
"Maintaining No Home Ownership Until Move-In Means at Least 4 Years of Rental Market Instability"

[Image source=Yonhap News]

[Asia Economy Reporters Onyu Lim, Chunhee Lee] "They are already 'precious jeonse tenants.' Now, the price is whatever you call for." (Representative of Hanam City A Real Estate Agency, hereafter referred to as the agency)

After the government announced the pre-sale schedule for 60,000 households in public housing sites in the metropolitan area, the jeonse market in the areas planned for the 3rd New Towns, including Hanam, was literally in an uproar. Demand for listings continues, but there are no properties to broker. In some areas, complexes with no jeonse listings at all are appearing one after another.

The representative of Hanam City A agency said, "Even Seoul jeonse refugees have come flooding in, and many people are looking, but the rental market is completely blocked due to the Lease 3 Act and pre-sale waiting demand," adding, "The jeonse price for newly built 30-pyeong units is approaching 900 million KRW."

Hanam and Namyangju See 'Zero Jeonse' Phenomenon

On the 9th, Asia Economy surveyed agencies around Gyeonggi Province, where the 3rd New Towns such as Hanam Gyosan, Namyangju Wangsuk, and Bucheon Daejang are being developed, and found that the shortage of jeonse listings was severe.

Especially, Hanam, which has excellent access to Gangnam and is highly preferred by prospective pre-sale applicants, is experiencing the worst jeonse shortage. For example, in Pungsan-dong's Misa Riverside Central Xi (1,222 households), near Misa Station on Subway Line 5, there were only two jeonse listings. Even Hanam Xi, the largest complex in Deokpung-dong with 875 households, had only one listing for a 125㎡ (exclusive area) unit. There were also complexes with zero jeonse listings. The Pungsan I-Park Phase 1 complex, with 686 households, currently has no available jeonse listings.

A representative from Pungsan-dong B agency explained, "Although the pre-sale schedule for Gyosan District has been confirmed this time, fast-moving prospective applicants have already moved into this area, so there are almost no properties currently available."

The situation in Namyangju, where pre-sales for Wangsuk 1 and 2 districts will be held from September to December next year, was similar. Even large complexes mostly had fewer than ten jeonse listings. For example, in Dasan New Town, checking listings in complexes with over 1,000 households such as Jayeon & Ipyunhansesang (1,615 households), Bando Yubora Maple Town (1,261 households), Dasan Jayeon & Lotte Castle (1,186 households), and Booyoung Green Town (1,086 households), only 2 to 6 jeonse listings per complex were found. According to Asil, jeonse listings in Namyangju have sharply decreased from about 1,000 in May to around 600 now. A representative from C agency in the area said, "Jeonse has become difficult to find since the pre-sale announcement, and now even semi-jeonse that matches price and timing is hard to find."

A representative from D agency near Bucheon Daejang District also said, "Since the 3rd New Town was confirmed, it has already become difficult to find jeonse," adding, "Although the pre-sale period has been announced and we are receiving inquiries, it is frustrating because there are no properties to introduce."

'Price is Whatever You Call'... Did Advancing the Sale Cause Trouble?

The shortage of jeonse is leading to a sharp rise in jeonse prices. According to the Korea Real Estate Board's weekly apartment trend report, jeonse prices in Hanam City have risen for 60 consecutive weeks since the third week of July last year. In particular, the increase rate in the second week of July reached 0.93%, more than six times the national average of 0.14%. Based on actual transaction prices, the jeonse price for a 91㎡ unit in Pungsan-dong's Misa Riverside Central Xi rose from 545 million KRW in May to 700 million KRW last month. The 84㎡ unit in Seondong Misa Riverside Centriver jumped from 470 million KRW in April to 665 million KRW last month. Jeonse prices in Namyangju have also been rising for 24 consecutive weeks since the fourth week of March. Especially in the third week of August, the increase rate was 0.58%, showing a steep upward trend recently.

The background to this situation lies in the current characteristics of the subscription system. It is naturally advantageous to live in the local basic government area for new towns in the Gyeonggi area when applying for pre-sale.

Currently, in large-scale housing sites over 660,000㎡ in speculative overheated zones in Gyeonggi Province, 30% of the general supply is preferentially allocated to those who have lived in the relevant basic local government area for more than two years. The remaining 70% is allocated 20% to other Gyeonggi residents and 50% to other metropolitan area residents. Unlike Seoul and Incheon, where 50% is preferentially allocated based on metropolitan area criteria and the remaining 50% to other metropolitan areas, in Gyeonggi Province, considering the number of applicants and allocated households, residents of the relevant local area have an overwhelmingly higher chance of winning.

In fact, in the general supply for 'Gwacheon Prugio Bellarte' in Gwacheon Knowledge Information Town, which held a pre-sale in July, the average competition rate for the relevant area (Gwacheon City) was 18.4 to 1, with 1,936 applicants for 105 households. This is somewhat different from the recent metropolitan area pre-sale market, which tends to show triple-digit average competition rates.

However, for applicants from other Gyeonggi areas and other metropolitan areas, the competition rates were similar to other places. Other Gyeonggi had 24,847 applicants, including those who failed in Gwacheon, for 70 households, showing an average competition rate of 355 to 1, nearly 20 times that of the relevant area. Other metropolitan areas had 45,264 applicants, including those who failed, for 175 households, showing a rate of 269 to 1.

Similarly, 'Gwacheon Jade Xi,' which held a pre-sale in February, showed a competition rate of 31.9 to 1 for 40 households among Gwacheon City residents, while other Gyeonggi had 477 to 1 and other metropolitan areas had 392 to 1, showing a sharp rise in competition rates.

The threshold for winning is also easier for residents of the relevant city or county. In the case of Gwacheon Jade Xi, where winners were determined by the total amount paid into the subscription account rather than the point system, the minimum payment amount to win (cutoff) for Gwacheon City residents ranged from 17.4 million to 21.7 million KRW depending on unit size, meaning that even with 14 years and 6 months of subscription payments, one could win. However, for other Gyeonggi residents, the cutoff rose to 26.46 million KRW for a 59㎡A unit, and for metropolitan area residents, it was 23.36 million KRW. They had to pay for 19 years and 8 months to over 22 years to win.

Given the unusually low competition rates and payment amounts in the recent metropolitan area pre-sale market, renting in the relevant area for just two years can make it easier to secure a home in a good location. For those without a home, this is a subscription method worth trying.

However, the government expects the rise in jeonse prices due to pre-sales to be 'limited.' Kim Heung-jin, Director of the Housing and Land Office at the Ministry of Land, Infrastructure and Transport, said, "Currently, the system is structured so that residents of the relevant area have the greatest advantage, so there may be demand to move into the area," but added, "Since the pre-sale and main sale periods are about two years apart, moving just before the pre-sale to qualify is difficult." It is not easy to meet the preferential supply criteria requiring continuous residence in the relevant local government area for more than two years as of the main sale's resident recruitment announcement date.

However, the market and experts have different expectations. Park Won-gap, Senior Real Estate Specialist at KB Kookmin Bank, analyzed, "As waiting demand for pre-sale increases, the sales market for mid-to-low priced housing in the metropolitan area may stabilize, but the jeonse market could become somewhat unstable."

Ham Young-jin, Head of the Big Data Lab at Zigbang, said, "Considering that one must maintain a no-home status until moving in after pre-sale, they will have to stay in the rental market for at least four years," adding, "Since the number of move-ins next year is also limited, it will inevitably burden the rental market."

He continued, "In large-scale housing sites in speculative overheated zones, 30% is preferentially allocated to residents of the relevant city or county, and even if they fail, they continue to compete in other areas, effectively giving 'three chances to apply,' which is absolutely advantageous," but added, "On the other hand, for housing sites under 660,000㎡, 100% is supplied to residents of the relevant area, so unless one targets only one of the 3rd New Towns, it is not considered a good strategy."

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