Seoul's apartment subscription competition ratio soared to 146-to-1 this year, marking the highest level since 2021, while the national first-priority average plummeted to 7-to-1, the lowest in five years, highlighting a deepening polarization in Korea's housing market.
Subscription Market Polarization Intensifies
Complexes subject to price caps attracted intense interest, with Jamsil Luel recording a 631-to-1 ratio and Yeoksam Central Xi reaching 487-to-1, driven by expectations of billions of won in potential gains from the gap between regulated prices and market values.
The October 15 housing measures have caused multiple projects including O'Tier Banpo and Acro de Seocho to postpone their subscription schedules. Competition ratios for areas outside the three core Gangnam districts and outer metropolitan regions are expected to decline next year, requiring investors to focus more selectively on prime locations.
Jeonse Market Faces Rising Pressure
The Korea Housing Institute projects the metropolitan area jeonse (lump-sum deposit lease) increase rate to rise from 1.8% this year to 3.8% next year, with Seoul expected to climb from 3.0% to 4.7%.
Housing supply is set to fall sharply, with only 120,000 units scheduled for completion in the metropolitan area next year, less than half the annual requirement of 250,000 units. The shift from jeonse to monthly rent is accelerating, adding to the burden on end-users.
Policy Mortgage Rates Rise
Korea Housing Finance Corporation announced that Bogeumjari loan rates will increase by 0.25 percentage points starting January 1, rising to an annual rate of 3.9-4.2%. The 30-year maturity product will rise from 3.85% to 4.1%, the first increase in two years and two months since November 2023.
The hike follows a 0.56 percentage point surge in MBS issuance rates from 3.306% to 3.866%, driven by rising government bond yields. With October Bogeumjari loan disbursements reaching 1.8397 trillion won, 2.8 times the previous year, increased financing costs for low-income homebuyers appear inevitable.
Central Bank Warns on Housing Risks
According to the Bank of Korea's Financial Stability Report, Seoul's housing market risk index reached 0.90 in the third quarter, the highest since 2018. Seoul apartment market capitalization now accounts for 43.3% of the national total, exceeding the previous peak recorded in August 2020.
Seoul apartment prices have risen 12.1% cumulatively this year. With next year's new housing supply in Seoul expected to plunge 48% to 16,412 units, investors need to closely monitor the direction of supply policies amid ongoing conflicts between the central government and Seoul Metropolitan Government.
First-Generation New Town Redevelopment Accelerates
The Ministry of Land, Infrastructure and Transport announced expansion of the fast-track system to all areas of first-generation new towns, previously limited to pilot districts. Eight of 15 pilot districts have already passed urban planning committee reviews within approximately six months of establishing basic plans, reducing the timeline by more than two years.
The accelerating pace of redevelopment projects in Bundang, Ilsan, Pyeongchon, Sanbon, and Jungdong new towns is drawing attention as a medium-to-long-term investment opportunity.
Yongsan Rail Yard Development Proposal
Seoul Mayor Oh Se-hoon proposed expanding housing supply at the Yongsan Rail Yard to 8,000 units, an increase of 2,650 units from the original 5,350-unit plan. However, calls within the ruling party for 10,000 to 20,000 units make final agreement uncertain.
The city explained that further expansion would require infrastructure changes, adding at least two more years to the timeline. Market prices in surrounding areas could vary depending on the development schedule and final supply volume of the Yongsan International Business District.
