Last Year's Housing Supply Hits Lowest Since 2005... Regional Areas Halved Compared to Previous Year

Sale price per ㎡ rises 27% year-on-year
Impact of increased overall costs, deregulation, and selective sales

Last year, the supply of apartment units for sale was recorded as the lowest since 2005. In the provinces, the supply volume was halved compared to the previous year, and the supply volume relative to permits was only about one-third.

Image sketch related to Jamsil 5 Complex Apartment. Photo by Yongjun Cho jun21@

On the 19th, the Construction Industry Research Institute stated in a trend briefing that the supply volume in 2023 was 192,425 units, the lowest since the Ministry of Land, Infrastructure and Transport began publishing statistics in 2005.

Compared to 2015, when the annual supply volume was the highest at 525,467 units, it is only about 36%. This is the lowest level of supply volume since the 2000s.

By region, last year the supply volume in the Seoul metropolitan area decreased by 16.1% from the previous year to 114,009 units, while in the provinces it dropped by 48.3% to 78,416 units.

In January last year, the supply volume in the Seoul metropolitan area decreased by up to 92.2% compared to the previous year, but gradually recovered as market uncertainties such as interest rate hikes eased. However, in the provinces, the recovery of supply volume was slow even in the second half of the year.

Last year, the supply volume relative to permits in the provinces was about one-third. It decreased from 45.8% in 2022 to 37.6% last year. In the Seoul metropolitan area, the supply volume relative to permits was 63.2%, down 8 percentage points from 71.2% the previous year.

The volume of permits is a leading indicator of supply, so a decrease in supply relative to permits means that project progress is becoming more difficult.

The period from permit approval to the start of construction also lengthened, increasing from 7.9 months in the first half of 2021 to 11.6 months in the first half of last year.

Last year, the price per square meter for supply rose by 27.1% compared to the previous year. This is interpreted as the result of three combined factors: rising labor and raw material costs, deregulation, and selective supply in projects with high sales potential.

Kim Seong-hwan, a senior researcher at the Construction Industry Research Institute, explained, "Among the factors driving price increases, the only variable that can be artificially controlled is 'price regulation.' Considering the current market trend, it is expected to be difficult to strengthen regulations, so difficulties in the supply market are anticipated this year. For the supply market to recover, a reduction in prices is a prerequisite, but since it is practically difficult to adjust the three major factors affecting price increases, it will take some time for the market to warm up."

Last year, the proportion of post-sale (hufunyang) units is estimated to have doubled from 8.3% the previous year to 16.2%. The reason for choosing post-sale is that prices can be set higher; post-sale units are excluded from the Housing and Urban Guarantee Corporation's sales guarantee and are not subject to price review.

Even if the price ceiling system applies, the expectation that it is advantageous when calculating land and construction costs has led to an increase in the proportion choosing post-sale.

Researcher Kim added, "In the case of post-sale, the consumers who can afford the high prices are limited, and it is expected that only complexes located in areas with comparable value to the high prices will be chosen by consumers."

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