Korean real estate market: Lending restrictions cause difficulties for ”single-building apartments”... Even re-openings are avoided

The tightening of lending regulations introduced by the South Korean government on June 27th has directly hit so-called "single-building apartments" in Seoul's unlisted (re-offering) condominium sales market.
As the fundraising environment for actual users has worsened, the contract rate has fallen sharply even for small and mid- to low-priced properties, and there are a number of cases where buyers are avoiding properties even when they are being offered without priority.
A typical example is the "Die Ateon" in Gil-dong, Gangdong-gu, Seoul. According to the Korea Real Estate Agency's "Cheongyak Home" dated the 11th, there are 64 units in this property that are yet to be sold.
58 units are being offered for sale without priority from the 7th to the 14th of this month, but it has been pointed out that if things continue as they are, they may move into a voluntary supply stage (where they will be re-offered due to price changes, etc.).
A sales official from D.A.T.E.N. said, "The winners will be announced on the 17th, but the current application rate is not up to expectations. If there are any remaining units after the unranked recruitment,
"A shift to voluntary supply will be inevitable," he said. "For a property with an exclusive floor area of 59 square meters, it may be difficult to obtain a loan of about 51 million won (about 5.4 million yen)."
"We have been informing people that there is a fee, but many people find this burdensome," he said. The "Avenue Cheonggye 2nd" in Sungin-dong, Jongno-gu is showing a similar trend. Since the first sale in July 2021,
There are still 16 remaining properties, and the 12th round of unranked offers has been repeated. In particular, the number of remaining units has not changed even with the 11th round on the 4th of last month and the 12th round on the 9th of this month, and the actual progress of contracts is not yet known.
The slump in the market where such bargains could be bought is not just due to a decline in demand.
The government has also blocked loans for the rental property (a unique rental system in Korea where a deposit is required) and effectively blocked the "gap investment" method of using the deposit to pay the remaining amount.
The market has been restructured to allow only "cash buyers" to apply for condominiums, and potential applicants with limited financial resources are rapidly dropping out of the market.
On the other hand, popular properties and large apartments are popular in the unlisted market.
On the 24th of last month, Hill State Media Lule in Eunpyeong-gu had 1,246 applications for 109 units available without prior application, a high average of 11.43 times the number of applicants.
The Hobang Summit Gaebong in Guro-gu has also moved from an unranked recruitment to a random supply stage, and the competition rate for the fifth random supply in April this year was 10.36 times, while this month it was 10.36 times.
The price for the apartments is in the 900 million won range, but the price of new apartments in the area is expected to be in the 1.2 to 1.3 billion won range in the future, so demand is on the rise.
Park Jimin, president of the Wolyoung Cheonggyeok Research Institute, said, "Single-building apartments with unclear locations and high prices are likely to remain unsold for a long time due to the overlapping loan restrictions."
Due to the nature of the Koto area, where customers can choose between large, semi-newly built apartments at the same sales price, there is a lot of room for comparison for actual buyers."
He added, "In the current market, there are additional incentives from suppliers, such as discounted sales and relaxed contract terms.
"Unless there is some kind of incentive, it will be difficult to raise the contract rate," he said, adding, "In the future, flexible price adjustments will be unavoidable for standalone apartments, rather than maintaining high sales prices."
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