The Allure and Reality of ‘Lotto Cheongyak’: The Truth Behind Apartment Lotteries

offer the tantalizing possibility of significant profit margins

Apartment lotteries, known as 'Lotto Cheongyak,' offer the tantalizing possibility of significant profit margins, attracting considerable interest from potential buyers. However, the high price of these apartments and the challenges associated with securing financing reveal the harsh realities that often accompany winning a lottery. In this blog, we will explore the current state of 'Lotto Cheongyak' apartments and the risks involved.

Recently, apartments in the metropolitan area have started their lottery sales under the enticing label of 'Lotto Cheongyak,' capturing substantial attention. On the first day of the application period, the enthusiasm was so intense that the website experienced crashes due to overwhelming traffic. By 10 AM, the estimated waiting time was 72 hours, with a staggering 520,000 people in the queue.

The reason for this surge in interest is simple: the potential for substantial profit margins upon winning the lottery. For instance, an apartment in the Seocho and Banpo districts is expected to be priced about 2 billion KRW (approximately $1.5 million USD) less than the current market value. Similarly, apartments in Dongtan and Mokdong in Gyeonggi Province are projected to offer several million KRW in profit.

However, the reality is not so straightforward. The expected price for an 84m² (about 34 pyeong) apartment is up to 23.3 billion KRW (around $17 million USD), making it still out of reach for the average citizen. Even if one wins the lottery, the short timeframe for securing the apartment means that having a solid financial plan is crucial. Park Won-gap, Senior Real Estate Specialist at KB Kookmin Bank, highlights that a down payment of 20% is required, meaning at least 4 billion KRW (approximately $3 million USD) in cash is needed. With a total price of 23 billion KRW, obtaining a loan will cover only a portion of the cost, leaving over 12 billion KRW (about $9 million USD) to be covered in cash.

Recently, Seoul's apartment prices have risen for 18 consecutive weeks, marking the largest increase in nearly six years. Given this steep rise, the intense interest and expectations surrounding the lottery are understandable. However, the high price of the apartments means that many still find them prohibitively expensive, and the risk of being caught unprepared financially is significant.

The allure of 'Lotto Cheongyak' is strong, but the practical realities that follow winning a lottery should not be overlooked. It is crucial to have a thorough financial plan and to assess one’s financial situation carefully before entering the lottery. While the dream of acquiring a home may be enticing, jumping into the lottery without adequate preparation can lead to disappointment. Achieving the goal of home ownership requires both careful planning and a clear understanding of one’s financial capabilities.