In the first half of this year (January to June), the subscription vacancy rate for apartment complexes that were sold was found to exceed 40%. In particular, metropolitan cities such as Busan, Daegu, and Gwangju recorded subscription vacancy rates of over 70%. The subscription vacancy rate refers to the ratio of the number of unsubscribed units to the total number of units offered. In Seoul, competition rates reach several hundred to one, but the regional housing market is essentially frozen.
According to the Korea Real Estate Board (REB) and the real estate data platform Zigbang, the subscription vacancy rate for apartment complexes that were sold in the first half of this year is recorded at 41.9% (based on first preferences). This means that out of 10 units offered for subscription, only 4 were subscribed.
Seoul recorded a subscription vacancy rate of 0%, indicating that all new supply apartments were subscribed. However, major metropolitan cities and other regional cities faced significant unsubscribed situations. Among these cities, Busan had the highest subscription vacancy rate at 77.7%. Additionally, Gwangju (76%), Daegu (68.8%), Daejeon (67.8%), and Ulsan (53.3%) also couldn't get subscriptions for even half of their new supply apartments. The only metropolitan city with a subscription vacancy rate below 50% is Incheon (11.7%), which is part of the capital region.
By province, Gyeonggi Province had a subscription vacancy rate of 52.4%, meaning about half did not get subscriptions. In addition, Jeollanam-do recorded a vacancy rate of 95.1%, indicating that new apartment subscriptions were nearly nonexistent.
Industry experts analyze that the lack of subscriptions for new apartments in regional metropolitan cities is due to the presence of relatively affordable quasi-new apartments, which leads to continued subscriptions for newly priced apartments that are higher than these.
According to the Korea Housing & Urban Guarantee Corporation (HUG), Busan, which had the lowest subscriptions in the first half, had an average selling price of 10 million won per 3.3 square meters until 2022. However, in May 2023, the average selling price first exceeded 20 million won (20.13 million won). The average selling price for 'LEEL Riverpark Centum' in Haeundae District, starting from the 21st, is 44.1 million won per 3.3 square meters. This is the first time the price of private apartments in Busan has surpassed 40 million won.
Kim Hak-ryeol, head of Smart Tube Real Estate Research Institute, said, "The market price of quasi-new apartments under 10 years old around new apartment complexes in regional metropolitan cities has dropped significantly, and there is a higher demand to buy quasi-new apartments in good locations rather than subscribe to new apartments priced high."
Yang Ji-young, an expert at Shinhan Premier Pathfinder, noted, "In some regions like Busan and Daegu, the issue of unsold inventory remains severe," and added, "In the future, apart from complexes that have locational strengths and reasonable selling prices with expected capital gains, they will inevitably attract the indifference of subscribers." This indicates that people prefer to buy apartments that were sold at lower prices years ago rather than purchase new high-priced apartments.
There are opinions that new apartments are supplied out of necessity, considering financial costs when construction firms and developers know that unsold units will occur but still choose not to sell.
Kim In-man, head of Kim In-man Real Estate Economic Research Institute, stated, "Developers often buy land using bridge loans more than five years ago and continuously pay interest, which causes them to postpone sales schedules, thus leading to unsold units. They are compelled to proceed with sales despite knowing that unsold units will occur." He added, "Considering that construction costs have already risen significantly, they cannot reduce the selling price, resulting in a vicious cycle of unsold units."