[Housing Prices Rebound vs. Further Decline] ④ Persistent Polarization Between 수도권 and 지방... 'Spring Sale' Results Are Key

Some Complexes Including Jangwijai Radiant Sold Out
75,359 Unsold Houses in January
Polarization Between Seoul Metropolitan Area and Provinces Deepens After 1·3 Measures
March, Indicator for Predicting the Housing Market

After the 1·3 measures, some pre-sale apartments have recorded complete sellouts, signaling a rebound. However, due to rising material and labor costs, the upward trend in pre-sale prices continues, and the high-interest-rate environment persists, making it unlikely that the pre-sale market sentiment will reverse anytime soon. In fact, there are even concerns that the 1·3 measures will deepen the polarization of the pre-sale market between the metropolitan area and provincial regions. However, with the opening of the door for multi-homeowners to participate in non-priority subscriptions starting this month, the March pre-sale results are expected to serve as a barometer for predicting future market trends.

According to the "January Housing Statistics" announced by the Ministry of Land, Infrastructure and Transport, the nationwide unsold housing units reached 75,359. This is a 10.6% increase from 68,148 units in the previous month, marking the highest level in 10 years and 2 months. It has far exceeded the 62,000 units that the government initially mentioned as a risk threshold. The market is expressing concerns that "the problem is the speed," with some fearing that unsold units could exceed 100,000 in the first half of the year. In fact, unsold units, which were 31,000 in July last year, more than doubled in just six months. Compared to 21,727 unsold units in January 2022, it has surged 3.5 times.

Experts believe that due to construction companies pushing out inventory at the end of last year, the concentration of pre-sale units will continue, making an increase in unsold units inevitable until February. Yoon Ji-hae, Senior Researcher at Real Estate R114, said, "Although the rate of increase in unsold housing units in January has relatively slowed, the total number of unsold units has surpassed 70,000, indicating that the upward trend in unsold units continues. However, due to various regulatory relaxations at the beginning of this year compared to the end of last year, there is growing expectation that the pre-sale market will improve after March, when the off-season ends."

There are also concerns that consecutive regulatory relaxations will deepen the polarization between the metropolitan area and provincial regions. Through the 1·3 measures, regulations such as resale restrictions, mandatory residence requirements, and restrictions on interim payment loans have been eased, and from this month, multi-homeowners can participate in non-priority subscriptions regardless of their residence. For example, citizens of Busan can now purchase newly pre-sold apartments in Seoul, which means that areas with good locations or development benefits in the metropolitan area can expect subscription success. However, in provinces with insufficient demand, even the limited demand may shift to the metropolitan area, worsening the unsold housing problem. Looking at the January statistics alone, 8 out of 10 unsold housing units are concentrated in provincial areas.

Experts say it is premature to judge that the pre-sale market has brightened based on some successful cases such as "Jangwi Xi Radiant" and "Cheolsan Xi The Heritage." Kim Hyo-sun, Senior Real Estate Specialist at NH Nonghyup Bank, said, "Recent regulatory relaxations will act as a positive factor only for some complexes with concentrated demand or reasonable pre-sale prices. However, areas with relatively poor locations are expected to face concerns about unsold units, deepening the polarization in the subscription market."

Experts view March as a gauge for predicting future pre-sale market trends. Starting this month, regulations on non-priority subscriptions and the obligation for one-homeowners who won subscriptions to dispose of their existing homes have been abolished, and high-grade pre-sale projects in Gangnam are lined up. Moreover, November through February is usually the off-season for the pre-sale market, so this seasonal factor will disappear starting in March.

A representative from the pre-sale information company ForAdOne said, "Starting around April to May with ‘The DH Daechi Edelweiss’ in Daechi-dong, Gangnam reconstruction complexes such as ‘Cheongdam Leel’, ‘Raemian Reventus’, and ‘Raemian One Perla’ are scheduled to launch pre-sales in earnest," adding, "These complexes will lead the pre-sale market and serve as cases to predict the atmosphere of this year’s pre-sale market."