Housing Supply Shortage Becoming a Reality... Construction Starts and Permits Decrease Until August This Year

Construction volume until August halved compared to a year ago
Approval volume also decreased by nearly 40%
Government announces 'supply measures' amid intensified supply shortage concerns

As of August this year, the nationwide housing construction volume has decreased by more than half compared to the same period last year. The volume of permits has also dropped by nearly 40%, raising concerns about a supply cliff in the next 2 to 3 years. As worries about the supply shortage intensified, the government announced measures to revitalize housing supply on this day.

According to the ‘August Housing Statistics’ released by the Ministry of Land, Infrastructure and Transport on the 26th, the nationwide housing permit volume from January to August this year was 212,757 households, a 38.8% decrease compared to the same period last year (347,458 households). The decline rate expanded compared to the 29.9% decrease in permits from January to July. Apartment permits were 180,207 households, down 36.3%, and non-apartment housing permits were 32,550 households, down 49.7%.

The construction volume from January to August also sharply declined to 113,892 households, a 56.4% drop compared to the same period last year (261,193 households). Similarly, the decline rate expanded compared to the 54.1% decrease in construction from January to July. During the same period, construction in the metropolitan area was 56,473 households, down 56.9%, and in provincial areas, 57,419 households, down 55.9%. Nationwide apartment construction was 86,193 households, down 56.7%, and non-apartment housing construction was 27,699 households, down 55.3%. The number of completed houses nationwide up to August this year was 239,059 households, a 7.6% decrease compared to the same period last year (258,669 households).

The volume of housing sales also significantly decreased up to August this year. The cumulative nationwide apartment sales volume up to August was 94,449 households, down 42.3% compared to the same period last year. Metropolitan area apartment sales were 52,126 households, down 28.7%, and provincial area sales were 42,323 households, down 53.3% compared to the same period last year.

Considering that housing supply (move-in) usually occurs 2 to 3 years after construction and 3 to 5 years after permits, concerns are raised that a supply shortage may occur in the next 2 to 3 years. As concerns about supply shortages intensified, the government announced the ‘Housing Supply Activation Plan for National Residential Stability’ on this day.

Unsold houses nationwide have been decreasing for six consecutive months. As of the end of August, unsold houses numbered 61,811 households, a 2% (1,276 households) decrease compared to the previous month (63,087 households). Unsold houses in the metropolitan area decreased by 13.1% (1,158 households) to 7,676 households, and unsold houses in provincial areas also decreased slightly by 0.2% (118 households) to 54,135 households. This is analyzed not as a reduction in unsold housing volume but rather a decrease in sales performance itself.

On a cumulative basis from January to August this year, nationwide apartment sales were 94,449 households, down 42.3% compared to the same period last year (163,714 households). However, the so-called “malignant unsold houses” ? unsold houses after completion ? increased by 3.9% (351 households) from the previous month to 9,392 households. Although unsold houses after completion showed a decline last month for the first time in nine months, they turned to an increasing trend again after one month.

Housing transaction volume is recovering, increasing compared to the previous month. In August, nationwide housing sales were 51,578 cases, a 45.2% increase compared to the same period last year. Metropolitan area housing sales were 23,277 cases, up 67.7% compared to the same month last year, and provincial area sales were 28,301 cases, up 30.7%. Last month, apartment transactions in Seoul were 4,091 cases, more than four times the 907 cases in the same month last year.

The volume of monthly rent and lease transactions in August (based on the reporting date) was 217,254 cases, a 4.5% decrease compared to the same month last year. Jeonse (long-term deposit lease) transactions were 97,957 cases, down 9.1% compared to the same month last year, and monthly rent transactions were 119,297 cases, down 0.4%.

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