Last Year, Occupancy Rate for Units Over 85㎡ at 5.4%, an All-Time Low; Expected to Drop to 3% Range This Year

[Asia Economy Reporter Cha Wanyong] Last year, the proportion of large-sized housing units exceeding 85㎡ in exclusive area reached an all-time low, and it is expected to decrease further this year.

According to Real Estate R114 on the 28th, among the total nationwide housing supply of 332,459 units last year, the supply of units exceeding 85㎡ was only 17,932 units (5.39%). This is the lowest rate since 1990.

The supply of units exceeding 85㎡ maintained a double-digit percentage until 2015 after recording 8.98% in 1997. In 2016, it dropped to 7.99%, marking a single-digit rate for the first time in 19 years, and has steadily remained in single digits since then, hitting an all-time low last year.

Looking at the supply of units exceeding 85㎡ by city and province last year, all regions except Sejong (14.63%) and Seoul (10.45%) recorded rates below 10%. In particular, no large-sized units were supplied in Ulsan and Jeju, and Daejeon (0.02%) and Jeonbuk (0.32%) also showed very low rates below 1%.

This year, the supply of large-sized units is expected to decrease further. As of today, the expected supply of units exceeding 85㎡ registered with Real Estate R114 is 3.43%. Among the total supply of 25,966 units, only 891 units are expected to be larger than 85㎡. However, since some uncounted supply is expected, there is a high possibility that additional units will be added later.

In the market, a shortage of large-sized units has been occurring due to the reduced supply over several years. In fact, the average subscription competition rate for large-sized units was 10.44 to 1 in 2015, which was lower than the overall average of 11.6 to 1 at the time. However, in 2016, when the supply ratio of large units dropped to single digits, the competition rate reversed to 18.61 to 1, surpassing the overall average of 14.5 to 1, and has exceeded the overall average for seven consecutive years until last year.

The annual housing price increase rate was also lower for large-sized units compared to small and medium-sized units from 2007 to 2016, but in 2017, it slightly surpassed small and medium-sized units, reversing the trend for the first time in 11 years. Since then, over the past six years, large-sized units have shown higher rates than small and medium-sized units three times, maintaining a similar level.

Kwon Il, head of the research team at Real Estate Info, said, “During the real estate market boom in recent years, apartments were mainly supplied with small and medium-sized units that had high demand, which relatively increased the value of large-sized units. Especially in provincial cities where large-sized units are preferred, this trend is expected to become more pronounced due to the recent decrease in supply.”

Meanwhile, new sales of scarce large-sized units continue.

Hoban Construction plans to sell ‘We Park Mareuk Park’ in Geumho-dong, Seo-gu, Gwangju Metropolitan City, in March. It consists of medium to large-sized units ranging from 84 to 135㎡, with a total of 917 units across 15 buildings.

DL E&C will supply ‘e-Pyeonhansesang Dongtan Park Honors’ in Dongtan 2 New Town, Hwaseong-si, Gyeonggi-do, in March. It will be developed with 13 buildings from basement level 2 to 12 floors above ground, totaling 800 units with exclusive areas ranging from 99 to 115㎡.

Geumgang Housing will sell ‘Geomdan New Town Geumgang Penterium 3rd Central Park’ in Bullo-dong, Seo-gu, Incheon, in the same month. It is a large complex with 10 buildings from basement level 3 to 25 floors above ground, consisting of a total of 1,049 units with exclusive areas ranging from 74 to 98㎡.

Lotte Construction will supply ‘Wonju Lotte Castle Signature’ in Bangok-dong, Wonju, Gangwon-do. It will be developed with 16 buildings from basement level 2 to 15 floors above ground, totaling 922 units with exclusive areas ranging from 84 to 202㎡.