Mid-sized builders rushed into the subscription market last month, but with some projects struggling in the provinces, they began reconsidering timelines, including delaying sales.
According to the Korea Real Estate Board (REB) subscription portal on the 3rd, The Park Vista Dongwon in Sasang-gu, Busan, which took subscriptions starting on the 20th, received 114 applications for 835 units, leaving most types undersubscribed with an average competition rate of 0.13 to 1.
Metropolitan-area projects also struggled. Anseong Ayang District Geumseong Baekjo Yemiji in Anseong, Gyeonggi Province, received 109 applications for 633 units, recording an average competition rate of 0.17 to 1, and Jungheung S-Class Hill The Foret in Guri, Gyeonggi Province, received 876 applications for 404 units, exceeding the number of units on offer with an average competition rate of 2.2 to 1, but most types, except for some, were undersubscribed.
Along with weak living infrastructure in the provinces and a lack of brand competitiveness, a market slump caused by lending regulations also overlapped, leading to the view that mid-sized builders struggled.
Mid-sized builders have many business sites in the provinces because it is difficult to compete with large-builder brands in prime locations in Seoul. But the provincial real estate market, except for some areas, is facing difficulties as unsold inventory continues to emerge. According to the Ministry of Land, Infrastructure and Transport's Statistics Korea portal, as of September this year, 84.4% (22,992 units) of post-completion unsold units—considered hard-to-sell inventory—were in the provinces.
Mid-sized builders focused on the housing business responded by delaying sales, as weak subscription demand poses a significant burden.
An official at a mid-sized builder said, "The presales market has been so weak lately, and it is even worse in the provinces, so mid-sized builders are not launching sales at all," adding, "Profitability is not materializing now, and if there are unsold units after completion, the hit from financial expenses is huge, so many builders have postponed sales planned for the second half of this year to next year."
Experts also said that while some demand may shift to non-regulated subscription markets that avoided the Oct. 15 measures, outcomes will diverge depending on location and builder brand. Song Seung-hyeon, head of Urban and Economy, said, "Some buyers may move to non-regulated areas in the subscription market, but it is limited from leading to a broad-based shift in demand," adding, "With the recent strengthening preference for one solid home, mid-sized builders with relatively weaker brand power may struggle."