As tighter regulations on household loans in the financial sector take full effect, prospective residents who planned to move into newly built apartments are getting stuck. As lending thresholds rise and it becomes harder to prepare final payments, housing developers' market expectations and actual apartment move-in performance are falling at the same time.
On the 10th, a survey of housing developers by the Korea Housing Institute found that the nationwide apartment occupancy outlook index for September was 87.6, down 6.8 points from the previous month.
The occupancy outlook index gauges whether buyers of apartments are expected to make their final payments and move in as scheduled. A reading above 100 signals a positive outlook for occupancy conditions, while below 100 indicates a negative outlook is dominant. In other words, a decline in the index means more developers view market conditions unfavorably.
The occupancy rate, which indicates the share of households that actually moved in, also dropped sharply. In August, the nationwide apartment occupancy rate was 59.5%, down 8.6 percentage points from July. More than four out of 10 newly built apartments remained vacant without finding occupants on time.
By region, the occupancy outlook index in the Seoul metropolitan area, including Seoul and Incheon, fell 8.4 points to 81.0, while non-metropolitan areas also retreated 6.5 points to 89.0. In Seoul, a heavier tax burden on single-homeowners without owner-occupation requirements and loan regulations combined to deepen the slump in transaction sentiment, but a shift in demand to parts of Gyeonggi helped limit the decline to some extent. In contrast, Incheon fell 18.5 points.
The downturn is steeper in provincial-level regions. Jeju, where unsold dwellings remaining after completion have piled up, plunged 26.2 points to 66.6, and South Jeolla also dropped 22.3 points as short-term supply concentrated all at once. However, in Daegu and Sejong, the near absence of new move-in supply for the time being acted as a positive factor, keeping the index steady or slightly higher.
Actual move-in conditions in August also cooled across all zones. The occupancy rate in the Seoul metropolitan area fell to 80.8%, while in major non-metropolitan cities it was 55.5% and in other provincial areas it dropped to 51.6%, barely above half. The decline was particularly pronounced in Gwangju–Jeolla and Jeju.
The biggest reason for failing to move into apartments on time was "failure to secure a final payment loan (37.2%)." That was followed by failure to sell the current home (31.4%) and failure to find a tenant (15.7%). As banks sharply tightened mortgage loan reviews to manage the total volume of household loans, the number of buyers who failed to prepare their final payments appears to have surged.
A Korea Housing Institute official said, "With the September occupancy outlook and the August occupancy rate declining together, the tighter loan regulations appear to be worsening financing conditions that are affecting not only developer sentiment but also actual move-in conditions for prospective residents," adding, "With dwelling prices continuing to rise and a decline in future move-in supply expected, housing demand is not smoothly flowing into new apartment occupancy due to financial constraints. A response that comprehensively considers housing market supply-demand conditions and financing conditions seems necessary."