Transitioning in Seoul: A Realistic Alternative for One-Household Owners Seeking Existing Large Complexes

As the housing market heats up in Seoul, especially in prime areas like Gangnam and Mapo, the competition for new apartment subscriptions is fierce. 

As the housing market heats up in Seoul, especially in prime areas like Gangnam and Mapo, the competition for new apartment subscriptions is fierce. With rising prices and increasing demand, current homeowners are reevaluating their strategies for upgrading their living situations. This article explores the current landscape of apartment subscriptions in Seoul and highlights the potential benefits of purchasing existing properties, particularly large complexes, as a practical solution.

The summer of 2024 has seen a remarkable resurgence in Seoul's housing market, with apartment prices rising and the subscription market becoming increasingly competitive. Notably, in July and August, eight new apartment complexes in Seoul attracted over 230,000 applications for just 1,775 available units, resulting in an average subscription ratio of approximately 135 to 1—an increase from the previous year's average of 97.7 to 1. The highest demand was observed for the Raemian Wonpentas in Banpo-dong, Seocho-gu, which recorded a staggering average subscription rate of 527.3 to 1 for its 178 units.

This heightened competition has created a challenging environment for prospective buyers. Many are questioning whether to continue pursuing new apartment subscriptions or consider purchasing existing properties instead. The key reasons driving this shift include the escalating price disparities between favored neighborhoods and outer areas, along with the significant cost increases associated with construction that have impacted new unit prices.

Case studies of two prospective buyers illustrate this trend. 

Case #1: A young couple (A) initially secured a rental in Mapo and later transitioned to a rental in Jamsil, Seocho-gu. Despite applying for special subscriptions aimed at newlyweds, their chances of winning in highly coveted areas like Gangnam remain slim due to a low score of 32 points on the subscription point system. A plans to continue applying for subscriptions, hoping for better odds in the future.

Case #2: On the other hand, B, who owns an older apartment, is contemplating upgrading to a new unit. However, with a subscription score of 37 points, B faces significant challenges. For example, the competition for new developments like the D-Hich Bangbae has been intense, with average ratios reaching 258 to 1 in some cases. B is considering participating in upcoming general distributions but is also weighing the practicality of purchasing an existing apartment if subscriptions continue to yield unsatisfactory results.

Current data indicates that a subscription score of at least 60 points is necessary for a realistic chance at winning in the Gangnam area, as evidenced by the fact that 83% of successful applicants scored above 70 points. 

The ongoing trend has led to a notable increase in subscription waiting lists, with over 2.68 million people currently registered. However, with only a small percentage achieving the maximum points after 15 years of registration, competition remains high.

Given the current landscape, it is advisable for those seeking to transition from one apartment to another to focus on existing large complexes, particularly those with urgent sale prices. The post-Chuseok period is likely to see more affordable options emerge as prices adjust. In regions outside the core areas, many properties remain significantly below their previous peak prices, often by over 20%.

For homeowners looking to transition in Seoul, focusing on existing large complexes may offer a more realistic alternative to navigating the competitive subscription market. With the potential for attractive prices following adjustments in the market, this strategy could provide a timely opportunity for those ready to invest in their next home.