The volume of permits and construction starts, which are leading indicators of housing supply, sharply declined through July this year. In particular, construction starts and sales, which determine the volume of move-ins 2 to 3 years later, have halved compared to a year ago. Concerns have been raised that if this trend continues, it could affect the housing supply and demand balance.
According to the 'July 2023 Housing Statistics' released by the Ministry of Land, Infrastructure and Transport on the 31st, the nationwide housing project permit volume in July was 18,065 units, down 37.5% compared to the same month last year. The cumulative permit volume from the beginning of this year through July was 207,278 units, a 29.9% decrease from the same period last year (295,855 units).
Based on cumulative figures through July, housing permits in the Seoul metropolitan area totaled 78,889 units, down 28.2% year-on-year, while permits in other regions were 128,389 units, down 30.9%.
Construction starts and sales volumes also halved. Nationwide housing construction starts through July this year were 102,299 units, shrinking to less than 54.1% of last year’s volume. In particular, construction starts in Seoul during the same period plunged 67.9% year-on-year to 42,696 units. The Seoul metropolitan area decreased by 53.7%, and other regions by 54.6%.
Another leading indicator of housing supply, apartment sales performance, also declined. Sales approvals (performance) through July this year totaled 79,631 units, down 44.4% compared to the same period last year. The Seoul metropolitan area decreased by 31.7%, and other regions by 55%. The lowest apartment sales volume in the past was in 2013, when sales were 126,389 units, indicating that the current sales market is in a severe slump. However, cumulative completions through July this year were 218,618 units, a 2.1% increase compared to the same period last year.
With leading indicators such as permits, construction starts, and sales all showing simultaneous declines, concerns are emerging that housing supply could face disruptions. Typically, housing supply occurs 2 to 3 years after construction starts and 3 to 5 years after permits are issued.
Unsold Housing Declines for 5 Consecutive Months... Housing Transactions Slightly Decrease from Previous Month
Unsold housing has decreased for five consecutive months. As of the end of last month, the total number of unsold houses was 63,087 units, down 5.0% (3,301 units) from the previous month (66,388 units).
Nationwide unsold units surged to 75,438 units in February, then turned to a downward trend in March (72,104 units) for the first time in 11 months, and have continued to decline for five consecutive months.
Unsold units in the Seoul metropolitan area decreased by 16.3% (1,725 units) from the previous month to 8,834 units, and unsold units in other regions also decreased by 2.8% (1,576 units) to 54,253 units.
By size, unsold medium-to-large units over 85㎡ decreased by 4.6% from the previous month to 8,834 units, while unsold units 85㎡ or smaller decreased by 2.8% to 54,253 units.
Post-completion unsold units, known as 'malignant unsold' because they remain unsold even after construction is finished, totaled 9,041 units, down 3.8% from the previous month (9,399 units).
Housing transaction volume turned to a decline compared to the previous month. Nationwide housing sales in July were 48,170 cases, down 8.4% from June (52,592 cases). However, this is a 21.6% increase compared to the same period last year (39,660 cases).
The Seoul metropolitan area recorded 22,179 cases, down 7.5% from the previous month but up 32.5% year-on-year. Other regions had 25,991 cases, down 9.1% from the previous month but up 13.7% compared to the same period last year.
Apartment transactions in Seoul last month were 6,081 cases, down from 6,674 cases in June but up 25% compared to 4,858 units in the same month last year.
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