Apartment Occupancy Rate Rises 5.5% MoM... Reflecting Expectations for a Soft Landing in the Housing Market

Housing Industry Research Institute Survey Results: Nationwide Occupancy Rate at 71.7% in December
January Nationwide Apartment Move-in Outlook Index at 59.4... Up Compared to Previous Month

[Asia Economy Reporter Kwak Min-jae] Last month, the occupancy rate increased by 5.5% compared to the previous month. This is believed to be due to the government's comprehensive plan including tax and financial measures and deregulation to normalize the housing market.

[Image provided by Jutaek Sanup Yeonguwon]

On the 13th, the Korea Housing Industry Research Institute (KHIRI) conducted a survey targeting housing developers, revealing that the nationwide occupancy rate in December was 71.7%, up 5.5% from the previous month. By region, the Seoul metropolitan area rose from 76.6% to 77.8% (1.2%), the five major metropolitan cities increased from 67.0% to 71.9% (4.9%), and other regions went up from 61.6% to 69.3% (7.7%).

The biggest cause of unoccupied units was delayed sales of existing homes (56.0%), which increased by 4 percentage points from 52.0% the previous month. This is the highest level since 2021. Next were failure to secure tenants at 22.0% and failure to secure final payment loans at 20.0%, both down 2 percentage points from the previous month. However, KHIRI forecasted, "According to the Ministry of Land, Infrastructure and Transport's 2023 major work plan, easing of resale restrictions, lifting of regulated areas, and abolition of the obligation to dispose of existing homes when applying for subscription will facilitate housing transactions, leading to a rise in occupancy rates in the future."

[Image provided by Housing Industry Research Institute]

In fact, the nationwide apartment occupancy outlook index for January was surveyed at 59.4, expected to improve by 7.5 points from the previous month. The Seoul metropolitan area (55.0) is expected to rise by 9.6 points, metropolitan cities (59.2) by 3.3 points, and other regions (61.2) by 9.8 points. The increase in the occupancy outlook index is analyzed to be due to expectations for the government's announced measures for a soft landing of the housing market, including the full lifting of regulated areas except for the three Gangnam districts and Yongsan district in Seoul, easing of resale restriction periods, relaxation of regulations on multiple homeowners, and easing of loan regulations for the homeless.

The apartment occupancy outlook index is an indicator that surveys housing developers on their outlook for occupancy performance. Based on 100, a score above 100 indicates a majority of respondents have a positive outlook, while below 100 indicates a majority have a negative outlook.

Due to expectations for the soft landing measures such as tax and financial policies and deregulation, occupancy outlook is expected to improve significantly in Jeonnam (71.4), Chungbuk (61.5), Incheon (53.1), Jeonbuk (69.2), and Gyeonggi (59.5). However, since the lifting of Seoul's regulated areas was announced during the survey period (2022.12.26~2023.01.05) on January 3, the expectation was not fully reflected, resulting in a slight increase of 2.5 points to 52.5 in Seoul.

KHIRI stated, "With a 0.25 percentage point base rate hike expected in January, it is unclear whether the occupancy outlook index recovery trend will proceed rapidly due to increased loan cost burdens and the downward trend in housing prices. Given the ongoing high interest rates and the anticipated global economic recession, it remains to be seen how much impact the recently announced soft landing measures for the housing market will have."

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