Concerns Over Unsold Units Due to Interest Rate Hikes... December General Sales Down 32% Year-on-Year

Total Number of Households Decreased by 7,000
Polarization of Supply Between Capital Region and Provinces
Capital Region Supply Focused on Redevelopment Projects
Provinces Monitor Market Conditions While Conducting Sales

[Image source=Yonhap News]

[Asia Economy Reporter Kim Min-young] The prolonged interest rate hikes are casting a chill over the housing pre-sale market. Typically, December is a period when construction companies increase supply by pushing out the scheduled pre-sale units for the year, but due to concerns over unsold units, construction companies are weighing the timing of pre-sales, resulting in a 32% decrease in general pre-sale supply compared to a year ago. As the subdued pre-sale market sentiment continues, prospective buyers are focusing their attention on this month's subscription results.

According to Zigbang on the 5th, in December, 46 complexes with a total of 36,603 households are preparing for pre-sale, of which 25,853 households are general pre-sale units. Compared to the same month last year, the total number of households is expected to decrease by 7,092 units (16%), and general pre-sale units by 11,931 units (32%).

In early last month, the planned pre-sale complexes for November were 69 complexes with a total of 52,678 households, including 42,096 general pre-sale units. Upon re-investigation, the actual pre-sale complexes were 37, with a total of 35,440 households (67% supply performance rate), and 24,415 general pre-sale units (58% supply performance rate) were actually sold. Large-scale redevelopment apartments such as Olympic Park Foreon (Dunchon Jugong Reconstruction) and Jangwi Xi Radiant (Jangwi 4 District Redevelopment) contributed to boosting November's pre-sale performance.

The characteristic of the December pre-sale market is the polarization of supply volume between the metropolitan area and provincial regions. The metropolitan area has about 10,000 more units than the provinces. Of the 36,603 units supplied nationwide this month, 23,065 units are scheduled for pre-sale in the metropolitan area. In Seoul, 5 complexes with 4,476 units are preparing for pre-sale. Especially, supply is concentrated due to large-scale redevelopment and reconstruction projects. In Gyeonggi Province, 15 complexes with 15,917 units, and in Incheon, 4 complexes with 2,672 units are preparing for pre-sale.

In the provinces, 13,538 units are planned for pre-sale. New apartments will be supplied mainly in Gyeongsangnam-do (2,511 units), Chungcheongbuk-do (1,921 units), and Gangwon-do (1,649 units).

Ham Young-jin, head of Zigbang Big Data Lab, analyzed, "The metropolitan area, which is advantageous in terms of location, is expected to continue pre-sales mainly through redevelopment and reconstruction projects, but some regions with abundant supply, such as provinces, are likely to prepare supply while monitoring market conditions."

Despite the government's lifting of regulatory area restrictions, the pre-sale market is expected to remain subdued for the time being. The interest burden on prospective buyers has increased due to interest rate hikes, leading to a rise in unsold projects, and the profitability of new pre-sales is deteriorating due to rising construction costs, causing construction companies to be more cautious in securing orders than before.

Ham Young-jin, head of the Big Data Lab, said, "As the pre-sale market gradually shows signs of contraction, attention is focused on the subscription results in December."