Occupancy Rate Drops Sharply Compared to Last Month... Top Reason for Unoccupied Units: Delay in Selling Existing Homes

According to the Housing Industry Research Institute Survey, Nationwide Occupancy Rate in November at 66.2%
December Nationwide Move-in Outlook Index at 51.9... Slight Improvement Compared to Previous Month

Source: Korea Housing Institute

Asia Economy reporter Hwang Seoyul] Last month, the occupancy rate fell by 6.3% compared to the previous month. This was because the number of unoccupied households who could not dispose of their existing homes increased significantly due to decreased transactions amid high interest rates and falling housing prices.

On the 14th, the Korea Housing Industry Institute (KHII) conducted a survey targeting housing developers, revealing that the nationwide occupancy rate in November was 66.2%, down 6.3 percentage points from the previous month. By region, the metropolitan area dropped from 80.4% to 76.6%, a decrease of 3.8 percentage points; the five major metropolitan cities fell from 71.5% to 67.0%, down 4.5 percentage points; and other regions declined from 70.2% to 61.6%, a decrease of 8.6 percentage points.

The main cause of unoccupied homes was delayed sales of existing houses, accounting for 52.0%, the largest share. The proportion selecting this reason for unoccupied homes increased by 14.5 percentage points from 37.5% in the previous month due to transaction contraction. KHII analyzed, "Although funding has become somewhat easier due to the reduction of regulated areas and easing of loan regulations, housing transactions have decreased because of increased loan costs caused by high interest rates and falling housing prices." Other significant reasons for unoccupied homes included ▲failure to secure tenants (24.0%) and ▲failure to secure balance loans (22.0%).

Source: Korea Housing Institute

The nationwide apartment move-in outlook index for December was surveyed to improve by 5.6 points from the previous month to 51.9. The metropolitan area (45.4) is expected to rise by 1.5 points, metropolitan cities (55.9) by 9.3 points, and other regions (51.4) by 4.4 points. The outlook index slightly increased due to expectations of a slowdown in the pace of US interest rate hikes, the full lifting of regulated areas except for Seoul and some adjacent areas, and the easing of loan regulations for the homeless and actual demanders. However, the figure remains at a low level.

The apartment move-in outlook index is an indicator that surveys housing developers about their move-in performance forecasts. A score above 100 indicates that more companies responded with a positive outlook, while below 100 indicates more companies responded negatively.

With the lifting of regulations in all areas except Seoul and some adjacent regions, move-in outlooks are expected to improve in Gyeonggi (47.5), Incheon (38.7), and Sejong (50.0). However, Seoul (50.0), where regulations have not been lifted, is expected to worsen by 5.8 points, marking the lowest level since the survey began.

KHII stated, "The real estate transaction cliff is deepening due to high interest rates and falling housing prices, making it difficult for ordinary citizens to move residences and potentially leading to a contraction in housing supply. If this trend continues, there are concerns about a chain of bankruptcies among construction companies and secondary financial institutions due to unsold units, contract cancellations, and unoccupied homes after completion. Therefore, strong policy responses such as restructuring the regulated areas in Seoul are necessary."

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