"From COVID-19 to Price Caps"… First Half of Seoul Housing Supply Expected to be 'Record-Breaking' Returns to Usual Levels

Archive photo / Photo by Mun Ho-nam munonam@

[Asia Economy Reporter Yuri Kim] The Seoul housing market has been directly hit by the novel coronavirus infection (COVID-19). Although an unprecedented expansion in supply was expected due to the 'push-out' sales before the implementation of the private land price ceiling system in the first half of this year, concerns over the spread of COVID-19 and the postponement of the price ceiling system implementation have raised worries that the actual supply volume will significantly decrease.

According to Real Estate 114 and others on the 2nd, the planned supply volume in Seoul for the second quarter of this year is 12,070 households (total households including rental). Areas such as Heukseok 3 District in Heukseok-dong, Dongjak-gu (1,772 households), Sangye 6 District in Sangye-dong, Nowon-gu (1,163 households), and Jayang 1 District in Jayang-dong, Gwangjin-gu (878 households) are scheduled for sale this month. Heukseok 3 District prepared for sales this month by holding a general meeting for management disposition change approval at the end of February, just before the Ministry of Land, Infrastructure and Transport announced the postponement of the price ceiling system, contrasting with other complexes whose schedules became uncertain due to the inability to hold meetings. In May, Raemian Elinity in Yongdu-dong, Dongdaemun-gu (1,048 households) and Hillstate Sewoon in Ipjeong-dong, Jung-gu (899 households) are preparing for sales.

Earlier, the supply volume in Seoul for the first quarter was limited to 4 complexes with 4,751 households. This was due to the suspension of the early-year sales market as apartment subscription tasks were transferred from the Korea Financial Telecommunications & Clearings Institute to the Korea Real Estate Board, and the large-scale postponement of sales after February due to concerns over the spread of COVID-19. Only a few, such as Magok 9 Complex in Magok-dong, Gangseo-gu (962 households) and Le El Sinbanpo in Jamwon-dong, Seocho-gu (281 households), conducted sales by replacing physical model houses with cyber model houses.

Accordingly, the total planned supply volume for the first half of the year is expected to be 16,821 households. This slightly exceeds the average first-half supply volume of 13,020 households over the past five years. Considering that the industry initially projected 45,944 households for Seoul this year, with more than 30,000 households to be supplied in the first half, this represents nearly a halving of the volume.

However, it is uncertain whether even this will translate into actual supply. Many complexes preparing for sales before the end of this month, which was the previous grace period for the price ceiling system, have yet to finalize their sales schedules. This is due to unavoidable postponements of general meetings for union members, which must be held before sales, caused by COVID-19, and difficulties in negotiating prices with the Housing & Urban Guarantee Corporation (HUG).

A representative example is the mammoth complex of Jugong Apartments in Dunchon-dong, Gangdong-gu, with 12,032 households, comparable to the total planned supply volume in Seoul for the second quarter. Since disagreements over prices with HUG have not been easily resolved, sales in the first half are unlikely. Three complexes in Susaek and Jeungsan New Town in Eunpyeong-gu (Susaek 6 and 7 Districts, Jeungsan 2 District) have also postponed their general meetings, delaying their sales schedules.

The problem is that while a significant portion of the supply volume is expected to be pushed to the second half, uncertainties in the housing market will deepen over time. Variables such as changes in the economic situation due to the COVID-19 crisis and the intensification of polarization in the sales market remain. Ham Young-jin, head of the Zigbang Big Data Lab, said, "As the number of complexes postponing general meeting schedules for redevelopment projects increases due to COVID-19, the planned sales complexes in the first half are also highly likely to change," adding, "If the economic shock caused by COVID-19 leads to a contraction in real estate market demand, polarization in the sales market will also intensify."

This content was produced with the assistance of AI translation services.