Polarization in Apartment Occupancy Rates... 80% in the Capital Area, Stagnant in the 60% Range in Provinces

The gap in apartment occupancy rates between the metropolitan area and provincial regions is widening. Last month, the apartment occupancy rate in the metropolitan area rose to the 80% range, while it remained in the 60% range in the provinces.

[Image source=Yonhap News]

According to the Korea Research Institute for Human Settlements (KRHIS) on the 13th, the nationwide apartment occupancy rate last month was 66.7%, down 0.1 percentage points from the previous month. In May, the metropolitan area apartment occupancy rate was 80.1%, up 4.4 percentage points from the previous month (75.7%). Among the metropolitan areas, Seoul (81.9%→86.7%) increased by 4.8 percentage points, and Incheon·Gyeonggi (72.6%→76.7%) rose by 4.1 percentage points. In particular, Seoul's apartment occupancy rate has rapidly recovered from 76.2% in March this year to 86.7% last month.

KRHIS stated, "If Seoul's occupancy rate maintains the current trend, it is expected to soon recover to the average of the first half of 2020 to 2022 (93.3%)."

On the other hand, the provinces are still stagnant with a low occupancy rate in the 60% range. Last month, the provincial occupancy rate was only 63.9%. Except for Daegu, Busan, and the Gyeongsang region (61.2→66.3) which rose by 5.1 percentage points, all other non-metropolitan areas declined.

[Image provided by Housing Industry Research Institute]

The main causes of unoccupied apartments were 'delayed sale of existing homes' (44.0%), 'failure to secure tenants' (26.0%), and 'failure to secure balance loans' (20.0%) in that order. KRHIS expects the proportion of responses citing failure to secure balance loans to gradually decrease due to improvements in the loan environment, such as the abolition of restrictions on jeonse eviction loan funds and reductions in loan interest rates by commercial banks.

Meanwhile, the apartment occupancy outlook index nationwide fell by 0.1 points (85.6→85.5) this month. The metropolitan area rose by 1.1 points (86.2→87.3), metropolitan cities fell by 0.4 points (84.0→83.6), and provincial areas declined by 0.3 points (86.5→86.2).

A KRHIS official said, "The occupancy outlook index rose continuously by a total of 39.3 points over six months from 46.3 in November last year to 85.6 in May this year, but it fell by 0.1 points this month. However, since the decline is very small and expectations for market recovery among housing developers have been created due to government deregulation policies, increased transaction volumes, the base interest rate freeze, and interest rate cuts by commercial banks, the upward trend is expected to continue."

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