Incheon Faces Triple Threat of 'Empty Jeonse, Move-in Bomb, and Unsold Units' Amid Steep Housing Price Drop

Price Change Rate -2.46%
Opposite to Last Year's 11% Increase

Many Move-in Units Next Year Too
Concerns Over Ggangtong Jeonse Near 30,000 Households
Unsold Units Increase Amid Housing Market Slump

[Asia Economy Reporter Kim Hyemin] Amid the stagnation of the metropolitan real estate market, the decline in housing prices in the Incheon area is particularly severe. Incheon has been regarded as the last opportunity to own a home in the metropolitan area, attracting a large number of "Yeongkkeuljok" (borrowers who take out loans to the limit) last year. However, this year, housing prices have dropped by hundreds of millions of won, spreading the ‘triple fear’ of "empty jeonse" (rental deposits exceeding property value), unsold units, and a surge in move-ins.

According to Real Estate R114 on the 14th, the cumulative apartment price change rate in Incheon from January to September this year was -2.46%. This decline is larger than the national average (-0.14%) and is the second largest drop nationwide after Sejong (-2.95%). It also fell more sharply than Daegu (-1.7%). Considering that Sejong and Daegu have been in a downward trend since last year, Incheon’s decline this year is particularly notable.

Incheon was one of the hottest real estate markets last year. According to Real Estate R114, prices rose by 11% last year alone. Narrowing down to January through September, prices increased by 8.99%. The situation has changed 180 degrees in just one year. Incheon recorded a 0.19% increase until December last year, but fell to -0.02% in January this year and has continued a negative growth rate for nine consecutive months.

This is also confirmed by actual transaction prices. According to the Ministry of Land, Infrastructure and Transport’s real transaction price disclosure system, a 84㎡ unit of ‘The Sharp Marina Bay’ in Songdo-dong, Yeonsu-gu?known as the Gangnam of Incheon?was sold for 650 million won last month. Considering that the same size unit was traded for 1.14 billion won in April, the price dropped by 500 million won in just four months. Similarly, an 84㎡ unit of nearby Hillstate Lake Songdo was sold for 750 million won at the end of last month, down 380 million won over nine months.

The sharp decline in housing prices in Incheon this year is analyzed to be due to a decrease in buyers burdened by short-term price surges, while supply is increasing due to a rise in move-in volumes. Additionally, concerns over delays in the opening of the metropolitan area’s GTX (Great Train Express) Line B, which was one of the reasons for last year’s price increase, have led to a flood of disappointed sellers, further accelerating the price decline.

In fact, the number of apartments scheduled for move-in in Incheon this year is 42,605 units, a 120% increase compared to 19,366 units a year ago.

The problem is that the volume of move-ins will not decrease next year either. According to Real Estate R114, the number of apartments scheduled for move-in next year is 42,113 units, maintaining a level similar to this year.

With the combination of falling housing prices and a surge in move-in volumes, concerns over empty jeonse are growing. The average jeonse price ratio of apartments in Incheon was 62.79% as of the end of last month, exceeding the metropolitan area average of 54.8%. In particular, the number of apartment units with a jeonse price ratio exceeding 80%, raising concerns about empty jeonse, reached about 30,000 units. This accounts for about 6% of the sample households in Incheon, higher than in Seoul and Gyeonggi Province.

The sales market is also stagnating, with unsold homes on the rise. According to the Ministry of Land, Infrastructure and Transport, as of July this year, the number of unsold homes in Incheon was 544 units, about 59% higher than 341 units a year ago. Among these, the number of ‘malignant unsold’ homes?units that remain unsold even after construction is completed?rose sharply from 67 units to 252 units during the same period, more than tripling.

Yeo Kyung-hee, senior researcher at Real Estate R114, said, "Incheon is experiencing a rapid price adjustment after a significant price increase during the housing boom." She added, "Since oversupply is expected next year as well, the downward trend may continue. The risk of empty jeonse is higher in complexes with large price declines. It is necessary to be cautious when entering the market for purchase or jeonse in areas where price declines coincide with an increase in new supply."

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