Even with a Flood of Supply, Subscription Remains 'Cold'... Growing Fear of Unsold Units

Concerns Over Oversupply Crisis Varying by Region

Last month, nearly 50,000 apartment units were supplied nationwide, setting a record high, but the enthusiasm in the subscription market is rapidly cooling down. Amid the downward trend in housing prices, cases of subscription shortfalls are also emerging. With loan regulations and interest rate hikes dampening home-buying sentiment, concerns are rising that the oversupply could lead to a widespread "unsold housing" crisis.

According to the monthly construction and real estate trend report released on the 14th by the Korea Research Institute for Construction Industry, the supply volume in January this year was recorded at 48,737 units. This is a 66.8% increase compared to January last year, and considering that January is an off-season, it is an unprecedented figure. It is 16 times more than the 2,991 units supplied in January 2011, which was the lowest nationwide supply since 2010. The institute explained, "This is due to the continued push effect caused by the DSR (Debt Service Ratio) regulation on balance loans." From this year, balance loans are also included in the DSR calculation (40%), and many complexes issued resident recruitment announcements at the end of last year and received subscriptions this month to avoid this standard.

However, the atmosphere in the subscription market is quite different. According to Real Estate R114, the nationwide apartment subscription competition rate in January this year was 15.5 to 1, down from last year's average of 19.7 to 1. The competition rate in the metropolitan area (Seoul, Gyeonggi, Incheon) dropped nearly by half, from 31.0 to 1 to 17.4 to 1. In particular, Seoul's rate fell to 34.4 to 1 in January this year from an average of 164.1 to 1 last year, about one-fifth of the previous level. In provincial areas, subscription shortfalls are occurring frequently, and in the Gyeonggi region, shortfalls are increasing in private subscription special supplies. According to the Korea Real Estate Board's Subscription Home, among the eight complexes supplied in the Gyeonggi area last January, four experienced shortfalls in the special supply category, and the units were transferred to the general supply.

Unsold housing has also been on the rise for three consecutive months since October last year. According to the "December Housing Statistics," as of the end of December last year, the total number of unsold houses nationwide was 17,710 units, a 25.7% increase compared to the previous month (14,094 units). The metropolitan area increased by 2.5%, and provincial areas by 28.4%. Given this situation, concerns are emerging that the unsold housing crisis will spread due to oversupply by region this year.

The Korea Research Institute for Construction Industry pointed out in the report, "It is time to consider normalizing real estate regulations, including finance, so that the supply volume can show a stable appearance."

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