Due to Rising Sale Prices... Proportion of Supply Below 20 Million KRW per 3.3㎡ Decreases

6.5%p Drop in Last Year's Sale Share
Sharp Decline in Units Under 60㎡...25.2%p Decrease

[Asia Economy Reporter Kim Hyemin] Last year, as the average apartment sale price increased, the proportion of apartments supplied at less than 20 million KRW per 3.3㎡ noticeably decreased.

According to Real Estate R114 on the 14th, the total number of apartments nationwide that received general supply subscription applications last year was 155,855 units (excluding rental), of which 135,283 units were supplied at 20 million KRW or less per 3.3㎡. This accounts for about 86.8% of the total, which is high, but compared to the average of 93.3% over the previous five years (2017?2021), it decreased by 6.5 percentage points.

By region, the metropolitan area, where apartment sale prices rose sharply, saw a significant decrease from 85.9% to 73.5%. The non-metropolitan area experienced a smaller decrease from 99.2% to 93.7%.

In particular, the proportion decreased significantly for apartments with an exclusive area of 60㎡ or less. The share of units supplied at 20 million KRW or less per 3.3㎡ among those 60㎡ or smaller averaged 90.5% over the previous five years but dropped by 25.2 percentage points to 65.3% last year.

This is attributed to the rapid rise in small apartment sale prices recently and the large volume of small-sized supply in Seoul last year, including Olympic Park Foreon (Dunchon Jugong Reconstruction). Apartments with an exclusive area of 60?85㎡ had a relatively larger share of general supply units, offering better cost-effectiveness per unit area.

Yeo Kyung-hee, Senior Researcher at Real Estate R114, said, "The decrease in the proportion of supply priced below 20 million KRW is due to the rise in sale prices caused by high interest rates and increased construction costs," adding, "The upward trend in sale prices is expected to continue this year due to the lifting of regulations in certain areas."

Senior Researcher Yeo also advised, "With increased price sensitivity in the subscription market due to loan interest burdens and falling housing prices, there is expected to be a concentration on cost-effective apartments emphasizing affordable sale prices. If you are considering applying for subscriptions this year, you should carefully evaluate not only the competitiveness of the sale price compared to surrounding apartment market prices but also how reasonably the sale price per unit area is set."