- Small 59㎡ units drying up in the sales market... Scarcity value rising
- Current system favors construction companies building more medium to large units
- Urgent need to improve system by raising population density standards or applying differential floor area ratios for small and large units
"The number of 1-2 person households is skyrocketing, but there is an absolute shortage of small-sized apartments such as the exclusive 59㎡ units that they frequently seek, increasing housing instability among low-income groups who are vulnerable in housing. Institutional improvements must be made as soon as possible for the sake of housing stability for the common people." (Park Sang-eon, CEO of UNAL Consulting)
Recently, concerns have been raised that housing inconveniences for low-income people will worsen as the exclusive 59㎡, once the hallmark of small apartments in the western Gyeonggi region including Gimpo and Incheon, disappear from the sales market.
As a result, especially for people in their 20s and 30s, opportunities to purchase their own homes at relatively low prices are decreasing, and voices calling for an urgent increase in small apartment supply through institutional improvements are growing louder.
According to Real Estate 114 on the 15th, the supply volume of small apartments with exclusive areas of 60㎡ or less (excluding rentals) in the Seoul metropolitan area including Seoul, Incheon, and Gyeonggi steadily increased after 2012 but sharply dropped from 2015 onward.
In fact, a survey by Real Estate 114 on housing types around the western Gyeonggi region found that among 260,382 households supplied in areas such as Songdo International Business District, Cheongna District, Geomdan New Town, Yeongjong Sky City, Lu One City, and Gimpo Hangang New Town, only 19,004 households were small apartments with exclusive areas of 60㎡ or less (excluding rentals), accounting for just 7% of the total.
In the case of Songdo International Business District, out of 57,835 households, only 2,370 were 60㎡ or less, representing 4%. Cheongna District had 2,897 out of 27,775 households, or 10%. Geomdan New Town had 7,562 out of 69,702 households, or 11%, and Yeongjong Sky City had 5,687 out of 44,732 households, or 13%.
Additionally, Lu One City had only 488 out of 9,521 households, or 5%, and Gimpo Hangang New Town had zero households with exclusive areas of 60㎡ or less out of 50,817 households.
■ Industry points out "Current population density standards need revision"
The reason for the decrease in small apartment supply is that constructing larger units yields higher profitability for construction companies.
Generally, the number of households is determined based on population density standards when building apartments. However, in western Gyeonggi areas like Incheon and Gimpo, it is more profitable to include medium to large-sized units rather than small ones, so construction companies tend to avoid small units, exacerbating the shortage of small apartments.
Population density standards are set as 300 people per 10,000㎡ for high density and 200-250 people for medium density, and the number of households per unit area is determined by dividing by the average number of household members. For example, in medium-density areas with a population density standard of 200 people per unit area, dividing by an average household size of 2.5 means only 80 households can be built.
The problem is that the same "household members per household" figure is applied regardless of whether medium-large or small units are built. In Incheon and Gimpo, although medium-large units accommodate more household members, the number of household members per unit is set at 2.5 for both small and medium-large units.
From the construction companies' perspective, building medium-large apartments costs less while the total sales price is higher, increasing revenue. Conversely, small units require dividing space into smaller areas, increasing material costs and the number of households, which also necessitates more underground parking spaces, leading to higher costs.
An industry official said, "If medium-large units are based on 3.4 household members and small units on 1.8, the supply of small units would increase, but currently, since the figures are the same, everyone builds only medium-large units," adding, "If medium-large apartments meet population density standards, construction companies have no incentive to build small apartments."
Applying the same floor area ratio without differentiation between small and medium-large units is also one of the reasons for the decrease in small apartment supply. Increasing the proportion of medium-large units allows full utilization of the floor area ratio, but small units make it difficult to fully utilize it.
■ Soaring prices and point scores make home ownership difficult for people in their 20s and 30s
Experts point out that to increase the supply of small apartments, the focus should be on addressing institutional loopholes rather than criticizing companies' profit-seeking. To increase the supply of small apartments accessible to young people with limited financial resources, it is necessary to actively consider differentiating household members per household and floor area ratio standards.
In particular, in the past, prices in Incheon and Gimpo were relatively lower than in Seoul, so even 84㎡ units did not impose a heavy financial burden, leading to high consumer demand. However, recently, prices in the metropolitan area have risen significantly, and due to government regulations, it is difficult to secure funds, increasing demand for 59㎡ units.
Moreover, with stricter subscription conditions recently, it is difficult for young people, including newlyweds, to win apartment allocations. People in their 20s and 30s have low subscription scores due to factors such as being non-homeowners, subscription account duration, and number of dependents, making winning allocations nearly impossible. Therefore, local governments agree that population density standards should be revised to increase the supply of small to medium-sized apartments through institutional improvements.
Kwon Dae-jung, a professor in the Department of Real Estate at Myongji University, said, "As 1-2 person households increase even in the metropolitan area including Incheon, preference for small units is high," adding, "It is urgent for local governments to improve systems to increase the supply of small apartments by raising population density or providing various incentives such as floor area ratio."
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