1.6 Trillion Effect? Supply Indicators Rise for Two Consecutive Months... Permits Remain Weak

Ministry of Land, Infrastructure and Transport Announces October Housing Statistics
Cumulative Figures Show Clear Decline... Supply Shortage Concerns Remain
Unsold Homes Decrease for 8 Consecutive Months

The number of completions, starts, and sales volume last month, which are leading indicators of housing supply, all increased by double digits. This appears to partially reflect the effects of the '9.26 Housing Supply Activation Plan' announced by the government in September. However, based on the cumulative data from January to October this year, there is a clear decline in all three indicators compared to the previous year, leading to interpretations that it is too early to determine whether this is a temporary rebound or a trend.

Monthly and annual cumulative permits trend as of October. (Provided by Ministry of Land, Infrastructure and Transport)

According to the 'October Housing Statistics' announced by the Ministry of Land, Infrastructure and Transport on the 30th, housing starts in October reached 15,733 units, a 31.4% increase from the previous month (11,970 units). Another supply indicator, sales, surged by 134.3% to 33,407 units compared to September (14,261 units), and completions rose by 58.1% to 19,543 units from the previous month (12,358 units). All three indicators have increased for two consecutive months.

This seems to reflect the market impact of the government's '9.26 Measures,' which were implemented to accelerate the supply pace. According to the Ministry of Land, the government provided a total of 1.6 trillion won in support for project financing (PF) loans and non-apartment construction funds.

However, when looking over a longer period, the decline in housing indicators is evident. This is why concerns about housing supply shortages in the next two to three years remain unresolved. From January to October this year, housing permits totaled 272,918 units, a 36.0% decrease compared to the same period last year. Starts during this period were 141,595 units, down 57.2% year-on-year, and sales were 142,117 units, a 36.5% decrease compared to the same period. Completions during this time were 270,960 units, down 18.5% from the previous year. Typically, housing supply occurs 2 to 3 years after starts and 3 to 5 years after permits are issued.

Additionally, the nationwide housing permits, which saw a surprise rebound in September, dropped by 58.1% to 18,047 units last month compared to the previous month. The monthly housing permits, which had been around 30,000 units until the first half of this year, fell to 18,000 units in July and further dropped to about 5,000 units in August. Although permits rose to 40,000 units in September, marking a rebound after five months, they fell back to the 10,000-unit level again.

Lee Eun-hyung, a research fellow at the Korea Construction Policy Research Institute, said, "Currently, both the public and private sectors are struggling to supply housing. The public sector, which has been urged to expand housing supply over the past several years, appears to have no additional capacity, and the private sector prioritizes profitability, so there is no incentive to focus on housing supply amid the current market downturn."

In October, unsold housing units numbered 58,299, a 2.5% decrease from the previous month (59,806 units), marking an eight-month consecutive decline. However, post-completion unsold units, classified as chronic unsold housing, increased by 7.5% to 10,224 units from the previous month (9,513 units), surpassing 10,000 units. Regarding this, the Ministry of Land explained that the October figure is below the 10-year average of 14,342 post-completion unsold units, so it is not a situation of concern.

Meanwhile, the total housing sales transactions in October (based on the reporting date) were 47,799 units, a 3.3% decrease from the previous month, while jeonse (long-term lease) transactions increased by 4.5% to 210,449 units compared to the previous month.

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