[Real Estate Finance] 250,000 Housing Units Scheduled for Occupancy Next Year, Supply Shortage Persists

Decrease in Permits and Construction Volume Over 2-3 Years
70% of Planned Complexes Have Undecided Sale Schedules
House Prices May Continue Rising in the Second Half of Next Year

The estimated apartment supply volume for next year is 250,000 units. The decrease in permits and groundbreaking volumes over the past 2-3 years is expected to lead to a supply shortage. As unsold apartment units increase in provincial areas, many places have been unable to set sales dates. Due to supply-demand instability, there is a forecast that prices may start to rise around the second half of next year.

According to the Construction Industry Research Institute and others on the 13th, the estimated number of move-in units scheduled for next year (including rental units) is 253,494. Considering that the volume for the second half of this year is 181,948 units, the annual move-in volume for next year is expected to shrink compared to this year. In particular, the volume scheduled for the first half of next year is about 142,462 units, and it is expected to decrease to 98,194 units by the first half of 2026. The Construction Industry Research Institute’s own analysis model forecasts the number of units planned for sale next year to be 290,000.

Due to the impact of interest rate hikes over the past 2-3 years, both permit and groundbreaking volumes have decreased, resulting in a significant reduction in move-in volumes. According to the Ministry of Land, Infrastructure and Transport’s statistics, apartment permits decreased from 427,650 units in 2022 to 377,612 units in 2023. For the period from January to September this year, the figure was 190,970 units, which is more than 50,000 units less compared to the same period last year (242,204 units).

Groundbreaking volumes have also sharply declined over the past two years. In 2022, groundbreaking volume was 383,404 units, about 200,000 units less than the previous year. Last year, it was only 242,188 units. The ratio of groundbreaking volume to permits dropped to 73.5% in 2022 and 56.5% last year. Due to the contraction of real estate project financing (PF), this trend of decreasing groundbreaking volumes is likely to continue.

Kim Seong-hwan, a senior researcher at the Construction Industry Research Institute, analyzed, "From next year onward, market interest in new apartments is expected to increase as the shortage of new apartment supply becomes recognized. The price increase pressure caused by supply stagnation may appear from the second half of next year."

According to the weekly KB Apartment Market Trends report by KB Real Estate, Seoul apartment sale prices surged by 0.22% in just one week. The photo shows the Granjae Apartment in Mapo-gu, Seoul, on the 5th. Photo by Jinhyung Kang aymsdream@

The sales market next year is in a similar situation. About 70% of the complexes scheduled for sale next year are just one month away from next year but have not set sales schedules. According to Real Estate R114’s estimate this month, the nationwide private sale volume for next year is 57,600 units. Among these, 40,558 units (70%) have undecided sales timing. Real Estate R114 explained that although they usually survey the next year’s planned sales volume at the end of the year, it is rare to have so many complexes unable to set sales schedules like this year. Due to strengthened loan regulations and sluggish housing prices, the sales market is difficult to predict, so construction companies appear to be cautious in setting sales schedules.

Major complexes confirmed for sales next year include Daerim Acro Cloud Park in Seocho-gu, Seoul (March), and Daebang-dong Acro River Sky in Dongjak-gu, Seoul (Noryangjin 8 District, April). Public sales are scheduled for March next year at Hanam Gyosan A2, Namyangju Wangsuk 2 A1, and Namyangju Wangsuk 2 A3 blocks. Banpo DH Class T (5,335 units), Jamsil Le L (1,865 units), and redevelopment of Galhyeon 1 District are known to be planned for sale next year but have not set sales schedules yet.

An industry insider said, "Many places are continuing bridge loans or commitment loans because the project owners or associations have not decided on sales timing. Even if they sell now, it is uncertain whether it will go well, so many hesitate. In non-metropolitan areas where unsold units are obvious, they have no choice but to discuss adjusting sales timing."

Hana Financial Research Institute forecasted, "Even if some of this year’s planned sales volumes are delayed to next year due to increasing unsold burdens, decreases in permits and groundbreaking volumes, and contraction of the sales market, next year’s sales volume may fall below the long-term average. While provincial areas will experience sluggish subscription due to high prices compared to market value, core areas in the metropolitan region are expected to maintain strong subscription demand due to price increase expectations."

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