Daegu, Accumulating Housing Supply and Falling Sale Prices

Hillsstate Seodaegu Station Central Bird's-eye View

More than 85% of the general supply units in a complex in Daegu, which completed its subscription schedule, remained unsubscribed. Although the government lifted regulatory restrictions due to the increase in unsold units in the Daegu area, it has proven ineffective. As new properties accumulate, sale prices are also falling.

According to Subscription Home on the 4th, ‘Hillstate Seodaegu Station Central’ in Bisan-dong, Seo-gu, Daegu, which completed subscription applications the day before, showed that 651 out of 757 general supply units remained unsubscribed. Even after accepting second-priority applications from other regions, it was insufficient.

The subscription market in Daegu has been sluggish this year. According to the Housing and Urban Guarantee Corporation (HUG), the average initial subscription rate in Daegu in the second quarter was 18%, the lowest among all provinces nationwide. This is a decrease of 80.60 percentage points compared to the same period last year (98.60%) and 34.10 percentage points compared to the previous quarter (52.10%).

Following the Ministry of Land, Infrastructure and Transport’s announcement, from the 5th of last month, Suseong-gu in Daegu was removed from the speculative overheating district, and Dong-gu, Seo-gu, Nam-gu, Buk-gu, Jung-gu, Dalseo-gu, and Dalseong-gun were removed from the adjusted target areas, raising some expectations for a recovery in Daegu’s housing market. However, it has shown little effect. All six complexes that completed general supply last month were also undersubscribed. In Bon-dong, Dalseo-gu, ‘The Sharp Dalseo Centello’ saw 246 out of 270 units remain unsubscribed. ‘Hillstate Daemyeong Central Phase 2,’ with 967 units for general supply, received applications for only 244 units.

Amid the continuing unsold situation, on the 29th, HUG designated Jung-gu, Dong-gu, Nam-gu, and Dalseo-gu in Daegu as unsold management areas and announced that this would be applied from the 5th of this month until September 30. Unsold management areas are regions within cities, counties, or districts with 500 or more unsold housing units that meet at least one of the following four criteria: △increase in unsold units △poor resolution of unsold units △risk of unsold units △need for monitoring.

With the accumulation of unsold units and continued supply expected in the second half of the year, the slump in Daegu’s subscription market is likely to persist for the time being. According to data compiled by Real Estate R114, 6,035 units will be supplied in Daegu this month, and a total of 8,716 units are scheduled to be offered from September to December. Kyunghee Yeo, senior researcher at Real Estate R114, stated, "Since most complexes supplied in Daegu this year are undersubscribed, it seems difficult for the market to absorb the volume that will flood in August."

As the subscription market, where new properties are supplied at relatively low prices, freezes, sale prices are also continuously declining. According to the Korea Real Estate Board, Daegu’s sale price index in June was 97, the same level as in March last year. The Daegu sale price index had risen to 100.8 in October last year.