As pre-sale prices soar, demand shifts to Seoul's smallest apartments

As pre-sale prices in Seoul keep climbing, subscription competition rates for smaller apartments are rising in tandem. With the pre-sale price of 84-square-meter units — long considered the standard "national size" — becoming increasingly unaffordable, demand for units under 59 square meters is surging among first-time buyers.

According to the Korea Real Estate Board's subscription platform Friday, the highest subscription competition rate in the first-priority general supply round for Jangwi Prugio Mark One — a redevelopment project in the Jangwi District 10 area of Seongbuk-gu, Seoul — was recorded by the 46-square-meter type at 81.17 to 1. Although the unit has one fewer bedroom than a 59-square-meter apartment, its pre-sale price of 830 million won ($557,000) to 880 million won made it up to 730 million won cheaper than the 59-square-meter type, priced at 1.37 billion won to 1.56 billion won.

A one-room apartment of roughly 10 pyeong (33 square meters) also drew stronger demand than the standard 84-square-meter type. The 39-square-meter Type B unit posted a first-priority competition rate of 10.81 to 1, outpacing all four 84-square-meter variants — Type A at 4.31 to 1, Type B at 4.43 to 1, Type C at 4.50 to 1, and Type D at 4.38 to 1. The 39-square-meter Type B was priced at 710 million won to 750 million won, putting it within reach for young first-time buyers, while the 84-square-meter units carried pre-sale prices of 1.66 billion won to 1.77 billion won — a threshold many buyers cannot clear.

Tightening mortgage regulations have also pushed demand toward smaller units. Following the government's Oct. 15 real estate measures last year, buyers can borrow up to 600 million won in mortgage loans only if the home is priced below 1.5 billion won. For homes priced between 1.5 billion won and 2.5 billion won, the cap falls to 400 million won; for those above 2.5 billion won, only 200 million won in mortgage financing is available.

For apartment subscriptions in particular, the high-priced home threshold is determined by the appraised value at the time of the final payment — typically about three years after the initial subscription. Even if a unit's pre-sale price falls below 1.5 billion won, buyers may lose access to the full 600 million won mortgage if the appraised value exceeds that threshold by move-in time.

Even as regulations tighten, pre-sale prices keep rising. The Korea Housing and Urban Guarantee Corporation released its private apartment pre-sale price trend report Wednesday, showing the average pre-sale price for private apartments in Seoul stood at 18.65 million won per square meter as of the end of June. That translates to 61.65 million won per 3.3 square meters — down 2.99 percent from 63.55 million won the previous month, but still the second-highest level on record.

The trend has also driven demand toward studio-style apartments priced below 1 billion won. In June, the 36-square-meter type in the first-priority general supply round for Acro River Sky — a redevelopment of the Noryangjin District 8 area — posted a competition rate of 13.65 to 1, surpassing the 84-square-meter Type B at 6.85 to 1. With the standard-size unit priced at around 2.7 billion won, buyers gravitated toward the studio option at around 1.1 billion won.

Online real estate communities have seen a growing number of posts from buyers weighing whether to proceed with subscriptions for studio-type units. One post in an Acro River Sky forum read: "My child will be 4 years old by the time we move in — I'm not sure if three of us can manage in a studio."

A construction industry official said pre-sale prices in Seoul's Han River belt have reached 80 million won per 3.3 square meters. "No matter how small the unit, demand for well-located new apartments remains steady," the official said, predicting that more buyers will pursue compact homes.