After the cancellation of the land transaction permit system, the Seoul apartment sales market is showing signs of recovery, particularly in the three districts of Gangnam (Gangnam, Seocho, Songpa), while the new apartment supply in Seoul is not taking place, leaving the market for new housing permits in a state of dormancy.
According to the Korea Real Estate Board's subscription home on the 12th, there has only been one new apartment supply in Seoul this year, which is the Raemian One Pearl. There are currently no planned projects for the month of March.
In January, there were a total of 3,751 general sale apartments nationwide, marking the lowest number since February 2023 (2,725 units). There was no supply of apartments in Seoul, Gyeonggi, Incheon, as well as in major cities such as Gwangju, Daejeon, Ulsan, and regions including Gangwon, South Gyeongsang, North Gyeongsang, South Jeolla, and Jeju, totaling 11 areas. It was the first time in 108 months that there were no apartment supplies in Gyeonggi since January 2016. There have also been no supplies in Seoul for the first time in 23 months since February 2023.
Construction companies are currently leaning towards delaying or scaling back their supply schedules. According to Zigbang, the total planned supply of apartments nationwide last month was 12,676 units, but the actual supply was only 5,385 units (as of the 27th of last month), resulting in a supply performance rate of only 42%.
While there has been a price increase centered around the three districts of Gangnam, many of the complexes preparing for new supply are located in the outskirts of Seoul, which are largely unaffected by the trends in Gangnam, leading to a slowdown in sales. Responses indicate that due to the impeachment politics, economic recession, and loan regulations, it is difficult to guarantee full sales even in Seoul. A spokesperson for a major construction company noted, “While revenue is somewhat guaranteed for supplies in Seoul and the metropolitan area, there are impacts from recent economic recession and loan regulations, and interest from buyers has diminished due to the impeachment politics,” adding, “It appears that some complexes are considering launching their projects after some political uncertainties are resolved.”
Another spokesperson from a construction company stated, “Compared to the active supply market between 2020 and 2022, the absolute amount itself has decreased,” and added, “With recent increases in construction costs and the housing market recession, the feasibility of projects is not as strong as before. It has become a burden to actively pursue supplies.”
Meanwhile, 14,416 new apartment units are planned for supply. Notably, large-scale complexes with over 1,000 units, including 'Goyang The Shop Forena' in Deogyang-gu, Goyang City (2,601 units), 'Yongin Prugio One Cluster Phase 2' in Cheoin-gu, Yongin City (1,804 units), and 'Pyeongtaek Brain City Block 10' in Jangan-dong, Pyeongtaek City (1,420 units), are expected to be supplied.
Experts predict that despite the shortage of new supplies in Seoul, there will be a large number of demands waiting until new supplies are available, rather than moving demand to the Gyeonggi area. Concerns about unsold inventory have already begun to arise in areas such as Goyang and Pyeongtaek, which had seen a lot of recent supply.
Go Jun-seok, a professor at Yonsei University's Sangnam Institute of Management, stated, “Rather than demand moving to Gyeonggi because there are no supplies in Seoul, it seems that there will be a preference for demand waiting in Seoul or moving to newly built or undervalued areas in the outskirts of Seoul,” adding, “Especially in the outskirts of Gyeonggi, where accessibility to Seoul is lower and regions with already accumulated unsold inventory exist, there is a risk of unsold inventory also occurring in new supplies.”
Kim Eun-sun, the lead of Zigbang's data lab, noted, “The supply market is highly influenced by the atmosphere, and currently there are concerns about unsold inventory, with unstable factors politically, making it difficult for developers to determine the timing of supplies,” adding, “Depending on market policies and directions, the timing for supplies will be considered, but political uncertainties will likely lead to an observation of the atmosphere.”