Housing Market Shrinks Amid Regulatory Easing Hopes and Raw Material Shortages

Actual Apartment Sales in April Reach Only Half of Expected Figures

With the new government set to take office, expectations for deregulation are rising, and domestic and international uncertainties are increasing due to soaring construction raw material prices, causing the housing pre-sale market to show signs of contraction.

According to real estate information platform Zigbang on the 2nd, the number of housing units pre-sold in April was only 43% of the initially planned supply. In a survey conducted at the end of March, 44 complexes were scheduled for pre-sale in April, totaling 26,452 units, with 23,446 units for general sale. However, only 20 complexes actually conducted pre-sales in April, totaling 11,258 units (43% supply performance rate), with 9,512 units for general sale (41% supply performance rate). This means that only about 43% of the planned volume was actually pre-sold.

In May, 42 complexes with a total of 24,598 units are preparing 22,383 units for general sale. Compared to May 2021, the total number of units has increased by 4,908 units (25%), and general sale units have increased by 4,132 units (23%). By region, Gyeonggi-do plans the largest supply with 7,460 units. In the provinces, 16,313 units are expected to be supplied, with Gyeongbuk accounting for the largest share at 5,157 units.

However, uncertainties related to external factors affecting apartment pre-sale schedules still remain. In fact, ahead of the new government inauguration on May 10 and the local elections in June, complexes preparing for pre-sale are adjusting their schedules amid expectations of real estate deregulation. Especially, projects preparing for redevelopment and reconstruction in the metropolitan area in the first half of this year are either not finalizing or postponing their pre-sale schedules due to expectations of deregulation in redevelopment, reconstruction, and real estate tax regulations.

Apartment complexes under redevelopment projects such as ‘Olympic Park Foreon (Dunchon Jugong Reconstruction)’ and ‘Raemian One Pentas (Shinbanpo 15th Complex)’, which were preparing for general sale in May, have indefinitely postponed their pre-sale schedules due to issues such as conflicts between the association and construction companies and adjustments in general sale prices considering the rise in construction raw material prices.

If the upper limit of the basic construction cost is further adjusted due to the increase in material prices, pre-sale prices may also rise in the future, which could be another factor delaying pre-sales. The Ministry of Land, Infrastructure and Transport recently announced that it plans to review whether to further increase construction costs by examining price fluctuations as of June 1 in response to the sharp rise in material prices.

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