Loan Restrictions Cause Apartment Move-in Rate to Drop 6%p in September... Regional Polarization Deepens

The nationwide apartment occupancy rate in September fell by more than 6 percentage points compared to the previous month, widening the gap between the metropolitan area and other regions.

Apartment Complexes in Seoul [Image Source=Yonhap News]

According to the Korea Research Institute for Human Settlements (KRHIS) on the 18th, the nationwide apartment occupancy rate last month was 65.1%, down 6.4 percentage points from the previous month.

While the metropolitan area rose slightly from 81.1% to 81.5% (up 0.4 percentage points), the five major metropolitan cities dropped from 68.3% to 63.3%, and other regions fell from 70.3% to 60.3%, showing a polarization between the metropolitan area and non-metropolitan areas.

Looking at detailed regions, Seoul increased slightly from 85.3% to 85.4%, and Incheon-Gyeonggi area rose from 79.1% to 79.6%. Seoul had maintained an upward trend since hitting a low occupancy rate of 76.2% in March but turned downward in August (from 89.5% to 85.3%). The Incheon-Gyeonggi area showed the highest occupancy rate since October last year (78.9%), and it is expected to recover to last year's average level (83.2%) soon.

Among non-metropolitan areas, Gangwon region notably plunged over 15 percentage points from 62.0% to 46.6%, marking the lowest point since June 2018.

A KRHIS official explained, "The overall apartment market has been depressed due to a decrease in purchases by residents outside the province, which significantly affects the Gangwon housing market."

The main cause of unoccupied units was a sharp increase in 'lack of balance payment loans,' rising from 9.8% in August to 21.3% last month. This is interpreted as a result of high loan interest rates at commercial banks, reduction in eligibility for special home mortgage loans, and the termination of 50-year maturity mortgage loans, all of which have made balance payment loan conditions more difficult for ordinary borrowers.

October Move-in Outlook Index

Meanwhile, the apartment move-in outlook index for October was surveyed at 92.4, down 3.2 points from 95.6 in the previous month. An index above 100 indicates a prevailing expectation among housing developers that move-ins will increase.

All regions showed a downward trend: metropolitan area (107.1 → 103.7), metropolitan cities (97.4 → 97.2), and provincial areas (90.0 → 84.6).

Within the metropolitan area, Seoul (108.5 → 109.0) and Gyeonggi (109.0 → 109.6) indices rose, while Incheon sharply dropped from 103.8 to 92.5.

A KRHIS official said, "Although the volume of scheduled move-ins in Incheon for October increased significantly compared to the previous month, the outlook index fell due to a preference decline caused by the poor location of those apartment complexes."

Among non-metropolitan areas, Daegu steadily maintained an upward trend from 66.6 in July to 78.2 in August, 84.2 in September, and 95.2 in October.

Despite concerns about unsold units due to the largest supply volume ever this year, Daegu's occupancy and balance payment rates have been high, especially around station areas, sustaining expectations for market recovery.

KRHIS stated, "Last month, the government announced measures to stabilize the housing market, including normalizing housing supply, providing sufficient public guarantees to housing developers, and expanding financial supply by financial institutions." They added, "The signals for supply expansion and the sharp rise in mortgage interest rates will offset each other, causing apartment sales and move-in outlooks to remain flat for the time being."

They also added, "The polarization of the housing market between the overcrowded metropolitan area and other regions will deepen."

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