September Housing Permits Surge 680% Month-on-Month... Construction Starts Remain Stagnant

Ministry of Land, Infrastructure and Transport Announces September Housing Statistics
59,806 Unsold Houses as of End of September
Transaction Volume Down 4.1% from Previous Month

Last month, housing permits surged by more than 680% compared to the previous month. This is interpreted as the government's effort to expand supply volume by increasing permit numbers in response to growing concerns about supply shortages due to the sharp decline in permits and construction starts throughout this year.

The problem is that while permit numbers increased, construction starts remain sluggish.

According to the Ministry of Land, Infrastructure and Transport's "September 2023 Housing Statistics" released on the 31st, housing permits in September totaled 43,114 units, a 686.9% increase from the previous month (5,479 units). Compared to the same month last year (32,742 units), this is a 31.7% increase.

Thus, the cumulative permits from January to September reached 255,871 units. However, compared to the same period last year, this is still a 32.7% decrease, indicating that permit numbers remain insufficient.

Contrary to the increased permit numbers, another supply indicator, housing construction starts, remained low. Last month, 11,970 housing units were started, maintaining a similar level to the previous month (11,593 units).

From January to September, nationwide housing construction starts totaled 125,862 units, a decrease of more than half (57.2%) compared to the same period last year (294,059 units).

The biggest reason for the decline in construction starts is the unfavorable market conditions. With the prolonged high interest rate environment and soaring raw material prices, construction companies cannot easily initiate projects as profitability is not guaranteed.

Additionally, the project financing (PF) market has sharply contracted due to the burden of unsold units, leading to an increase in sites that have obtained permits but have not started construction.

As of last month, the nationwide unsold housing units totaled 59,806. Although unsold units have been decreasing for seven consecutive months since peaking at 75,438 units in February this year, the rate of decline is not significant.

Moreover, unsold units after completion stand at 9,513, which is a 1.3% (121 units) increase compared to the previous month (9,392 units), showing a continuous rise.

Housing transaction volumes, which had been recovering, also declined last month. In September, nationwide housing sales transactions (based on reporting date) totaled 49,448, a 4.1% decrease from the previous month (51,578 transactions). September's monthly rental and lease transactions (based on reporting date) totaled 201,476, and the cumulative rental and lease transactions from January to September reached 2,083,954, a 5.9% decrease compared to the same period last year.

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