Along with a shortage of apartment supply in Seoul, supply of non-apartment homes such as low-rise apartments also fell noticeably.
According to the Ministry of Land, Infrastructure and Transport's statistics on completions by housing type on the 15th, 4,858 dwellings in Seoul categorized as row houses, multiplex homes, and multi-household homes were completed last year. That is about a 20.7% decrease from 2024 (6,123 dwellings).
These non-apartment dwellings, commonly called "low-rise apartments," once saw more than 30,000 units completed annually in Seoul, showing little difference from apartments in terms of supply scale. They recorded 35,006 units in 2018 and 31,128 units in 2019, and more than 20,000 new low-rise apartments were completed annually in 2020 (25,524 units), 2021 (25,735 units), and 2022 (22,000 units).
Then in 2023, completions fell below the 20,000-unit mark to 14,118 units, and in 2024 they plunged to 6,123 units. After that, last year they dropped to around the 4,000-unit level.
The ratio compared with apartments was as high as 90.1% in 2018, reflecting active supply of new low-rise apartments, but last year it fell to 9.7%—about one-tenth—of apartment completions (49,973 units).
Behind the decline in low-rise apartment supply are reduced project profitability due to rising construction costs and a tilt in preference toward apartments following the jeonse fraud crisis. As a result, the narrowing range of housing choices for young people and low-income groups for whom apartment rents and deposits are burdensome is cited as a problem.
In particular, since 2020, construction costs have surged due to the COVID-19 pandemic, raw material supply disruptions from the Russia-Ukraine war, rising labor costs, and other factors, eroding the profitability of supplying low-rise apartments. The construction cost index, calculated and published monthly by the Korea Institute of Civil Engineering and Building Technology (KICT), was 133.28 in Jan., up about 33.5% from Jan. 2020 (99.86).
In addition, the rapid emergence of the jeonse fraud crisis in 2021 and a spate of cases in non-apartment homes such as low-rise apartments appear to have strengthened the concentration of demand for apartments.
However, in Seoul, not only sale prices but also rents and jeonse deposits for apartments have risen sharply, so demand continues to emerge from entry-level workers and low-income groups who must live in relatively cheaper non-apartment homes.
In fact, sale prices and rents for low-rise apartments are also on the rise, albeit not as much as apartments. According to the Korea Real Estate Board (REB), in the past year, sale prices of row houses in Seoul rose 5.26%, while jeonse prices increased 2.05% and monthly rents rose 2.66%.