The government is pushing for improvements in the system by strengthening the qualification requirements for non-priority applications so that only those without housing can apply, but it has not undergone review by the Regulatory Reform Committee for over three months, preventing system improvements. Non-priority applications accept applications for leftover units after the regular sales contracts, and until now, anyone over the age of 19 could apply without a subscription account. Non-priority applications in areas subject to the price ceiling can yield capital gains of several hundred million won above the market price, drawing many applicants, which is also referred to as 'pick-up' applications.
The Ministry of Land, Infrastructure and Transport stated in a business report in January and an official announcement in February that it would improve the non-priority application system so that only those without housing can apply and that local governments could add residency requirements that allow only those residing in the area to apply. The core is to reform the non-priority application system for the public's access to housing. However, over three months after the government's official announcement, it has not yet been reviewed by the Regulatory Reform Committee, leading to expectations that system reform will be postponed until after the new government is launched.
According to the Ministry of Land, Infrastructure and Transport on the 12th, the Ministry established the 'Regulations on Housing Supply' in March to set criteria for non-priority application eligibility and submitted a regulatory impact analysis report to the Prime Minister's Office and the Office of the Prime Minister. Changing non-priority applications to be available only to those without housing adds regulatory burdens, so it must undergo the regulatory impact analysis and the Ministry's own review before receiving final approval from the Regulatory Reform Committee. Therefore, the Ministry submitted the regulatory impact analysis report to the Prime Minister's Office where the Regulatory Reform Committee is located after undergoing its own review.
However, it is uncertain when the proposed amendments will be presented to the Regulatory Reform Committee. A government official noted, "We have not yet undergone review by the Regulatory Reform Committee" and predicted that it would be presented around the end of this month. The Regulatory Reform Committee is co-chaired by the Prime Minister and a civilian chairperson and consists of 25 commissioners, including external experts.
With the delay in the review by the Regulatory Reform Committee, the government's legislative notice period has also ended. The Ministry completed its legislative notice on the regulations regarding housing supply from March 26 to April 7.
The Ministry of Land, Infrastructure and Transport expects that the strengthening of regulations on non-priority applications will impact an average of 352 business sites per year. Regarding the government's intention to intervene in non-priority applications, it was noted that "any adult can apply without being bound by residency or housing requirements, and as the competition for non-priority applications surged recently, the situation continues to be criticized as a so-called 'lottery application.'"
As pointed out by the government, some non-priority applications are attracting many applicants. Last July, the non-priority application for Lotte Castle near Dongtan Station saw a record-breaking competition ratio, with 2.94 million applications for one household. It is expected that there will be about 1 billion won in capital gains compared to neighboring complexes as it was applied for the 2017 supply price, resulting in what is referred to as 'no-reason' applications. This year, as well, 1,197,481 people flocked to the non-priority applications for three units in the 7th and 8th complexes of 'Hillstate Sejong River Park' in Sodeam-dong, Sejong City last February.
With the reform of the non-priority application system on the horizon, interest in non-priority complexes that emerge before the conditions are strengthened may increase.
Park Ji-min, head of the Wolyong Application Research Institute, said, "Complexes mainly in areas with price ceilings tend to be the most popular in non-priority applications," and added, "If non-priority applications arise in areas subject to the price ceiling, demand is likely to surge as people rush to get in before the system reform, intensifying competition for applications."