Seoul Housing Transactions Plunge 60%... Short-Term Supply Shortage Persists (Comprehensive)

Soaring Housing Prices Burden Leads to Sharp Drop in Transaction Volume
Supply Gap Worsens as Completed Housing Units Decrease

[Image source=Yonhap News]

[Asia Economy Reporter Kangwook Cho] Despite a nearly 60% plunge in housing sales transactions in Seoul due to soaring housing prices, key housing market indicators still suggest a potential short-term supply shortage. Although permits and construction starts have increased, completions have decreased, indicating that the supply shortage issue is unlikely to be resolved in the short term.

According to housing statistics released by the Ministry of Land, Infrastructure and Transport on the 31st, nationwide housing sales transactions last month totaled 88,937 cases. This represents a 37.1% decrease compared to 141,419 cases during the same period last year.

In the Seoul metropolitan area, transactions amounted to 42,074 cases, down 44.4% from the same period last year. The decline in transaction volume was particularly pronounced in Seoul, where only 11,014 cases were recorded in July, a sharp 58.7% drop compared to 26,662 cases in the same period last year. Provincial housing sales transactions were recorded at 46,863 cases, down 28.7% year-on-year. This decline in transaction volume is interpreted as buyers becoming more cautious amid rapidly rising housing prices.

However, even amid this transaction cliff, key permit indicators indicate a potential short-term supply shortage.

From the beginning of this year through July, nationwide housing permits and construction starts reached 277,354 and 310,937 units respectively, representing increases of 21.1% and 11.8% compared to the same period last year. On the other hand, completions decreased by 26.4% year-on-year to 215,475 units from 292,807 units. Considering that it takes 2 to 3 years for permitted and started units to actually be supplied to the market, this suggests that the supply shortage problem is unlikely to be resolved in the short term.

Unsold homes are also decreasing. At the end of July, nationwide unsold homes totaled 15,198 units, down 6.7% from 16,289 units the previous month. This is believed to be due to younger buyers, who have a lower chance of winning in subscription lotteries amid rising housing prices, purchasing unsold apartments. Unsold homes in the Seoul metropolitan area decreased by 17.1% to 1,381 units, while those in provincial areas fell by 5.5% to 13,817 units. Among the metropolitan areas, unsold homes in Gyeonggi-do dropped 22.6% from 1,267 units the previous month to 981 units.

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