Top 10 Construction Companies to Reduce Nationwide Housing Supply by 10% This Year

Impact on Metropolitan Area Housing Price Recovery
Total Supply of 138,410 Units
170,000 Units Decrease Compared to Last Year
Metropolitan Area Also Reduced by Over 5,000 Units

[Image source=Yonhap News]

This year, the nationwide move-in volume of the top 10 construction companies is estimated to decrease by 10% compared to last year. The move-in volume in the metropolitan area (Seoul, Incheon, Gyeonggi) is expected to decline by about 6% from last year. The real estate industry believes that the reduction in move-in volume will help the recovery of housing prices in the metropolitan area. However, construction companies, burdened with the 'move-in risk' highlighted by incidents and accidents last year, appear tense as they prepare for move-ins.

Decrease in Move-in Volume, Factor for Housing Price Increase

On the 12th, Asia Economy surveyed the housing move-in status by construction company and found that the total move-in volume of the top 10 construction companies this year is 138,410 households nationwide. This is 16,598 households fewer than last year's move-in volume (155,008 households). A real estate industry official said, "The previous government imposed stringent conditions on reconstruction and redevelopment projects, resulting in a decrease in move-in volume this year," adding, "If brand apartment move-ins in the metropolitan area decrease compared to last year, it will affect sales prices." The metropolitan area move-in volume of the top 10 construction companies decreased by 5,425 households this year (89,115 households) compared to last year (94,540 households).

Park Won-gap, Senior Real Estate Specialist at KB Kookmin Bank, said, "Supply shortages have little impact during a recession but act as a significant source of anxiety during a recovery period," and predicted, "The anxiety over supply shortages will influence the metropolitan area apartment prices to rise slightly this year."

Regarding jeonse prices, he said, "Since there is a high possibility of interest rate cuts in the second half of this year, tenants with variable-rate loans will have more financial leeway, and the preference for apartments has increased due to last year's villa fraud aftermath," adding, "Moreover, the shortage of move-in volume will also push jeonse prices up."

Real Estate R114 also estimated that the scheduled apartment move-in volume in the metropolitan area this year will be 150,271 households, down by 40,590 households from last year (190,861 households). The largest decrease was in Seoul, with a drop of 21,772 households (from 32,879 households to 11,107 households). Incheon will also decrease by 17,551 households (from 44,575 households to 27,016 households). Gyeonggi Province will see a decrease of 1,267 households (from 113,415 households to 112,148 households).

Construction Companies Playing It Safe

The construction site of the LH Gyeonggi-do Yangju Hoecheon A15 block apartment, where all 154 underground parking lot pillars are reported to have missing reinforcement bars. Photo by Younghan Heo younghan@

The construction industry is making thorough preparations for move-in risks. After last year's incidents such as the collapse of the underground parking lot at GS Construction's Geomdan Apartment in Incheon and the omission of rebar on the exterior walls by Korea Land & Housing Corporation (LH), concerns about move-in risks have heightened. An industry official said, "With major accidents occurring consecutively, companies preparing for move-ins are on edge," adding, "Many places are also experiencing delays in completion schedules due to rising raw material prices."

This year, the companies with move-in volumes exceeding 20,000 households are Daewoo Construction (27,669 households), Hyundai Construction (27,570 households), and GS Construction (about 20,000 households). Companies with more than 10,000 households include Hyundai Engineering (14,041 households) and POSCO E&C (13,914 households). Following them are DL E&C (9,612 households), Hoban Construction (9,496 households), Lotte Construction (7,107 households), Samsung C&T (4,684 households), and SK Ecoplant (4,317 households).

Among the total move-in volume, DL E&C had the highest proportion of metropolitan area move-ins at 94.5%. Hyundai Engineering (84.8%) and GS Construction (80.4%) also exceeded 80%.