'Lottery' apartment draws scrapped amid equity debate, leaving hopeful buyers frustrated

Apartments in Seoul as seen from Namsan last month. [Yonhap]

Even if the odds are tens of thousands or hundreds of thousands to one, there is still hope — that's why people wait and hold on. Is it really right to convert these units into public rental housing? For those of us without enough subscription points, this cuts off the very seedling of hope.

온라인 부동산 커뮤니티에 달린 무주택 실수요자 A씨의 댓글

Discontent is growing among prospective homebuyers on waiting lists after the government announced a plan to redirect unsold apartment units — known colloquially as "jupjup," or unranked subscription draws — into public rental housing as part of its housing supply package. The government says the move will curb the equity controversy surrounding these draws, which can yield windfall gains of hundreds of millions to tens of billions of won for the lucky few, while also securing quality public rental stock. But some homeseekers with lower subscription scores say the policy narrows their already slim chances of winning a draw. Critics also note that the annual volume of such unsold units in Seoul and other key areas is too small to make a meaningful dent in supply.

According to the Ministry of Land, Infrastructure and Transport and related ministries, the government's "Housing Rapid Supply Plan for Stabilizing Jeonse, Monthly Rent and Sales Markets," announced Thursday, includes a provision requiring LH and similar public entities to purchase remaining private-sale units in Greater Seoul regulated zones before they go to unranked draws, and then supply them as public rental housing.

The government has pledged to break ground on more than 230,000 additional units in the Greater Seoul area by 2030. The package also unveiled a new "universal public rental housing" category, calling for affordable, high-quality homes in desirable locations — transit-oriented areas and central Seoul — so that residents across income brackets can live there long-term. Unsold units from unranked draws would feed into this new category. The government is targeting an amendment to the Special Act on Public Housing enforcement decree by December to establish the new housing type, meaning unranked subscription draws in Greater Seoul regulated zones could be abolished as early as year-end.

Govt aims to cool overheated subscription market, maximize transit-area rental supply

The government included this direction in its Aug. 13 package to defuse the overheating and equity controversy fueled by lottery-style unranked draws, and to secure as many well-located public rental units in urban areas as possible — what officials have described as an all-out push for supply.

In recent years, unranked draws for complexes subject to the price ceiling on new apartments or priced below market have drawn competition ratios of tens of thousands, hundreds of thousands, and even millions to one. When Yeongdeungpo-gu's Yeongdeungpo Xi Dignity offered a single 59-square-meter unit in March, 130,938 applicants entered — a draw widely dubbed a "700 million won ($495,000) lottery." Before that, in July last year, four unranked units at Gangdong-gu's Olympic Park Foreon drew 224,693 applicants, for an average competition ratio of 56,173 to 1. In 2024, a single unranked unit at Dongtan Station Lotte Castle in Hwaseong, Gyeonggi Province, drew 2,944,780 applicants, setting an all-time record.

Dongtan Station Lotte Castle in Osan-dong, Hwaseong, Gyeonggi Province. [Herald DB]

The government's concern is that this pattern — windfall gains of hundreds of millions to tens of billions of won concentrated among a handful of winners — cannot be allowed to continue. The move also aligns with President Lee Jae-myung's repeated calls since taking office for high-quality public rental housing, and with the broader push to expand rental supply in well-located urban areas such as transit-oriented zones.

At a public forum on real estate policy held ahead of the tax reform and supply package announcement on July 23, Lee said the country needs a "housing ladder" and that providing high-quality public rental housing accessible to the middle class over the long term is "an important role the state must play." He added that the government was internally reviewing a plan to "first supply high-quality public rental units of around 59 or 84 square meters — the national housing standard — centered on transit-oriented areas, so that middle-income households can also live there long-term."

Young buyers, newlyweds with low scores say homeownership path has narrowed; experts question impact

Among homeseekers with lower subscription scores — including young buyers and newlywed couples — criticism is mounting that "one pillar of the path to homeownership has been blocked." Those waiting for unranked draws after losing out in the points-based general subscription competition, which accounts for the bulk of new supply, now find their options even more limited.

A homeseeker in his 30s, identified only by his surname Lee, said he could not understand why the government was converting units to public stock simply because the market-price gap was large. "It was the government that created the price ceiling on new apartments — one of the causes of the lottery-sized gains in the first place," he said. "It feels like the ladder to buying a home has been broken."

Apartments in Seoul's Gangnam area as seen from the 63 Sky Picnic observation deck at the 63 Building in Yeouido, Yeongdeungpo-gu, on Monday. [Yonhap]

Doubts have also emerged about the policy's practical impact, given that the volume of unsold units at high-demand complexes in Seoul and Gyeonggi Province is not large. According to ministry estimates, roughly 1,600 units of 85 square meters or smaller in Greater Seoul regulated zones went unsold between June last year and May this year. Critics argue that because the annual volume is inherently limited, converting these units to public rental housing may do little to boost urban rental supply while stoking resentment and eroding trust in housing policy among homeseekers.

Additional challenges include potential disputes with developers and housing associations over how to set a fair purchase price for remaining units, as well as the expanded financial burden on public entities such as LH — side effects that would need to be resolved before the policy takes effect.

Park Ji-min, head of the Wolyong Apartment Subscription Research Institute, said the abolition of unranked draws in Greater Seoul regulated zones "is a policy that will inevitably leave real end-users feeling a sense of deprivation, as an opportunity disappears." He added that he doubted whether the move would produce a noticeable supply effect, particularly in Seoul where the annual volume of unranked units is not large. "The intent is understandable, but rather than having the public sector buy up unranked units at popular complexes, a better alternative might be to cheaply acquire unsold units at complexes where high pre-sale prices led to contract failures, and supply those as public rental housing," he said.

hwshin@heraldcorp.com