Occupancy Outlook Hits 'Bottom' Again... "Concerns Over Construction Firms and Secondary Financial Sector Bankruptcies, Action Needed"

November Apartment Move-in Outlook Index 46.3... Down 1.3 Points from Previous Month
October Move-in Rate 72.5%... 'Delayed Sale of Existing Homes' Top Reason for Non-Move-in

[Asia Economy Reporter Hwang Seoyul] The apartment move-in outlook index has been hitting record lows for three consecutive months. As unsold inventory accumulates, concerns are rising over a chain bankruptcy of construction companies and secondary financial institutions, prompting calls for measures such as easing loan regulations and tax reform.

According to the Korea Housing Industry Institute (hereafter KHII) on the 10th, the nationwide apartment move-in outlook index for November was surveyed at 46.3, worsening by 1.3 points compared to the previous month. This marks another record low following last month. KHII analyzed that the sharp interest rate hikes in a short period have increased concerns about an economic downturn among housing demanders and the burden of loan costs, leading to weakened buying sentiment. Additionally, the decline in housing prices is expected to deepen the real estate transaction freeze.

The apartment move-in outlook index is an indicator that surveys housing business operators on their move-in performance outlook. Based on 100, a score above 100 indicates that more respondents have a positive outlook, while below 100 means more have a negative outlook.

The metropolitan area was recorded at 43.9, down 9.2 points from the previous month. Seoul was 55.8, Incheon 35.4, and Gyeonggi 40.4, each falling by 9.2 points, 9 points, and 9.6 points respectively. Other regions also declined by 0.8 points to 47.0 compared to the previous month.

On the other hand, the major cities were surveyed to rise by 2.0 points to 46.6 compared to the previous month. This is because the designation of regulated areas outside the metropolitan area was all lifted, leading to improved move-in outlooks in four local metropolitan cities: Busan (48.1), Daegu (50.0), Daejeon (50.0), and Ulsan (47.3). Gwangju was forecasted to decline by 3.5 points to 40.9.

KHII stated, "If this trend continues, it will become difficult for housing demanders to relocate, which could lead to a contraction in housing supply. As unsold inventory accumulates, there are concerns about chain bankruptcies among construction companies and secondary financial institutions, so preemptive measures such as easing loan regulations and tax reform are necessary."

Source: Housing Industry Research Institute

The nationwide occupancy rate in October was 72.5%, down 0.1 percentage points from the previous month. The metropolitan area was 80.4%, down 2.0 percentage points, and other regions were 70.2%, down 1.7 percentage points, while the six major metropolitan cities rose by 2.7 percentage points to 71.5%.

The causes of unsold units were delayed sales of existing homes (37.5%), failure to secure tenants (32.1%), and failure to secure balance loans (26.8%) in that order. KHII said, "Due to increased loan cost burdens and falling housing prices, the occupancy rate is expected to decline further in the future," adding, "Measures such as easing loan regulations and strengthening loan support for the homeless are necessary to prevent a decline in occupancy rates."

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