The unsold units recognized as problematic in Incheon have reached their highest level in nine years after completion. Due to continued new supply, attributed to good accessibility to Seoul, forecasts suggest that the issue of unsold units will worsen next year when the supply from the third new town begins.
According to the Ministry of Land, Infrastructure and Transport's statistics on unsold dwellings as of December last year, there were 3,086 unsold dwellings in Incheon. Among them, unsold units after completion accounted for 1,546, surpassing the previous record of 1,283 units in 2016, marking the highest level in nine years. This figure represents a 150.6% increase compared to the same period last year (617 units).
Incheon is scheduled to supply 17,000 dwellings in Gyeyang Technovalley, which is designated as a third new town, next year. Concerns have been raised that a prolonged contraction in the buying sentiment in the real estate market could negatively impact the absorption of the third new town's supply. Next year, about 50,000 dwellings are set to be supplied, including the 17,000 at Gyeyang Technovalley. In 2029, an additional 18,000 dwellings are also planned as part of the Guwol 2 public housing project.
The Gyeyang district in Incheon will build a total of 17,000 dwellings, including 9,000 public housing units, in the areas of Gyuhyeon-dong, Dongyang-dong, Pakchon-dong, Byeongbang-dong, and Sangya-dong, covering a total area of 3.33 million square meters.
Last September, the A2 and A3 blocks of the third new town conducted their primary application first, but they recorded lower competition rates than the preliminary application rates. The primary application for the A3 block saw 721 applicants for a total of 229 units, resulting in a competition rate of 3.14 to 1. In contrast, the A3 block had a preliminary application competition rate of 12.8 to 1. The A2 block had 2,299 applicants for 283 units in its primary application, which showed a competition rate of 8.12 to 1. When the preliminary application was held in July 2021, the competition rate was 52.54 to 1.
Particularly, the area in Incheon where the most problematic unsold units are accumulated is Seo-gu, accounting for 1,146 of the total 1,546 unsold units. It is adjacent to Gyeyang-gu and includes Incheon’s Geomdan new town. A representative from an A licensed real estate agency in Incheon Geomdan new town noted, “Some complexes in decent locations still have unsold units,” adding, “There haven’t been many inquiries due to a severe slump in the real estate market.”
Experts have projected that Incheon is facing competition with Gyeonggi Province, where large-scale supplies, including the development of new towns, are also planned. Consequently, it is anticipated that if the best-located complexes are excluded from selective applications, a polarization will emerge leading to difficulties in absorbing the supply.
Professor Seo Jin-hyung from the Real Estate Law Department at Kwangwoon University stated, “Incheon currently has a supply that exceeds demand, and its housing supply rate is the highest in the metropolitan area, resulting in unsold dwellings. Particularly, although it is close to Seoul, it lacks transportation infrastructure compared to Gyeonggi Province regions adjacent to Seoul, leading to lower competitiveness.” He added, “However, the third new towns will come with improved transportation infrastructure, and their location makes them accessible to Seoul, making some absorption of the supply possible. Other regions, however, are expected to struggle with absorption.”