December Apartment Unsold Inventory Expected to Reach Highest Level This Year... Supply Volume at Lowest

Jusan Research December Apartment Unsold Inventory Outlook Index 135.8
Up 4.4 Points from Previous Month... Highest Figure This Year

Source: Korea Housing Institute

[Asia Economy Reporter Hwang Seoyul] The number of unsold apartments this month is expected to increase the most this year. As the housing market continues to slump, construction companies are expected to become more cautious with their sales schedules.

According to the Korea Housing Industry Research Institute (hereafter KHIRI) on the 8th, the December apartment unsold inventory forecast index recorded 135.8. This is an increase of 4.4 points from last month (131.4), marking the highest figure this year. KHIRI stated, "Unsold inventory is expected to increase rapidly due to post-winning non-contracts and cancellations by buyers," and added, "Swift and strong additional measures in finance and taxation are necessary."

The index survey is conducted among members of the Korea Housing Association and the Korea Housing Builders Association to provide a comprehensive assessment of the sales market and support stable market management.

The forecast for sales volume also decreased by 2.6 points from last month to 68.2. Although December is usually a period of increased supply, this year, due to the market contraction caused by interest rate hikes, falling housing prices, and rising construction costs, the profitability of new sales has deteriorated, leading construction companies to adopt more cautious sales plans.

The sales price forecast index rose by 4.5 points from the previous month to 90.8, which appears to be due not to increased demand but to rising construction costs and higher financing costs caused by interest rate hikes.

Source: Korea Housing Institute

This month, the nationwide apartment sales forecast index is expected to rise by 7.8 points from the previous month to 52.4. Despite the recovery of the forecast index following last month, the nationwide index remains at a very low level.

Despite the housing market downturn, Daejeon (64.7), Ulsan (60.0), Jeonbuk (58.8), Sejong (50.0), and Gyeonggi (46.2) saw increases of more than 15 points compared to the previous month. Incheon (42.4), Gwangju (52.6), Daegu (56.0), Jeju (62.5), Busan (56.5), Gyeongnam (50.0), and Jeonnam (50.0) also experienced slight increases.

KHIRI explained, "The increases in Gyeonggi and Sejong appear to be a correction of the excessively low indices from last month, Ulsan reflects a recovery in the local manufacturing economy, and Daejeon and Jeonbuk show positive effects from the lifting of regulatory zones." It added that the slight increases in other regions are "policy effects of deregulation and a return of the indices to average levels."

Seoul (47.2) is expected to decrease by 4.0 points, Gangwon (50.0) by 3.8 points, Chungnam (47.1) by 2.9 points, and Gyeongbuk (50.0) by 2.4 points compared to the previous month. Notably, Seoul's forecast index has been declining for seven consecutive months, recording the lowest figure this year.