[Ryu Taemin's Real Estate A to Z] Unsold Houses Increased for 3 Consecutive Months... A Sign of Falling House Prices?

Decrease in 'Malignant' Unsold Units After Completion... Difficult to View as Leading Indicator of Decline
Increase in Uncontracted Units Due to Loan Regulations... Concerns Over Negative Impact on Housing Market

Apartment buildings in the Seoul area (Photo by Yonhap News)

[Asia Economy Reporter Ryu Taemin] Since the second half of last year, unsold houses nationwide have been increasing again. While some express concerns that this might be a sign of falling house prices, experts point out that because the types of unsold houses vary depending on the cause, caution is needed to determine whether they are ‘malignant’ or not.

According to the ‘December Housing Statistics’ released by the Ministry of Land, Infrastructure and Transport on the 4th, as of the end of December last year, the total number of unsold houses nationwide was 17,710 units. This figure represents a 25.7% increase compared to the previous month (14,094 units) and has risen for three consecutive months since September of the same year (13,842 units).

However, not all increased unsold houses are malignant. Unsold units are divided into ‘post-completion unsold’ and ‘uncontracted units’ depending on the cause. Post-completion unsold units are those for which subscription applications were accepted up to the second priority of general supply, but the number of applicants was insufficient compared to the supply. Most of these are ‘malignant unsold units’ caused by a lack of demand due to lower competitiveness in price and location or low expectations of price increases.

On the other hand, uncontracted units are those deemed ineligible due to reasons such as errors in entering point items, re-winning restrictions, or disqualification, as well as remaining units after contracts with backup winners. Units for which contracts were automatically canceled due to delayed or unpaid interim payments can also be considered uncontracted units. Although these units remain unsold, experts explain that this indicates sufficient potential demand, making it difficult to definitively say they are a leading indicator of a housing market downturn. Looking at the Ministry of Land, Infrastructure and Transport’s housing statistics, while the total number of unsold houses has increased, the number of ‘malignant unsold’ units has decreased. In December last year, the number of post-completion unsold houses nationwide was 7,449 units, down 514 units (6.4%) from September of the same year (7,963 units).

Meanwhile, recently, as the proportion of uncontracted units has significantly increased due to loan regulations, there are concerns that demand suppression could negatively affect the activation of the housing industry. According to the ‘January Housing Market Realistic Index’ data released by the Housing Industry Research Institute on the 20th of last month, among the reasons for unsold apartments nationwide, ‘failure to secure balance loans’ accounted for the highest response at 40.7%. This means that among 10 people who could not move into the apartments they purchased, 4 were unable to do so because they could not obtain balance loans.

Song Seunghyun, CEO of Urban and Economy, explained, "Due to the government’s strengthened loan regulations, the number of buyers unable to secure their own homes has greatly increased, which could negatively impact the housing market." He added, "Especially recently, as future expectations for the real estate market have declined, the number of buyers who have changed their minds is also increasing, so caution is necessary."

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