Unsold Housing Units Surpass 70,000... Construction and Sales Increase

April Housing Statistics Released... 70,000 Unsold Units After 1 Year
Permits Decrease While Construction Starts and Sales Increase

The nationwide inventory of unsold homes surpassed 70,000 units for the first time in a year since April last year (71,365 units). After increasing every month since November last year (57,925 units), the number of unsold homes exceeded 70,000 units. Analysts attribute this to the rise in housing supply nationwide, with unsold inventory increasing mainly in provincial areas.

Status of Unsold Houses Nationwide in April 2024. [Data provided by the Ministry of Land, Infrastructure and Transport]

According to the housing statistics for April released by the Ministry of Land, Infrastructure and Transport on the 31st, the number of unsold homes nationwide last month was 71,997 units, up 10.8% from 64,964 units the previous month. The so-called "malignant unsold homes," or unsold homes after completion, increased by 6.3% to 12,968 units last month from 12,194 units the previous month.

The nationwide housing construction starts, a leading indicator of housing supply, reached 43,838 units last month, a 275.9% increase compared to 11,661 units in the same month last year. The cumulative construction starts from January to April totaled 89,197 units, 29.6% more than 68,814 units during the same period last year. Since it takes about 1-2 years from permit approval to construction start and about 3 years from construction start to completion, construction starts are used as a leading indicator to gauge housing supply trends.

A Ministry of Land official said, "It appears that recent projects have entered construction because their profitability is judged to have improved compared to before." He added, "The government is providing a total of 30 trillion won in guarantees for real estate project financing (PF) projects through the Housing and Urban Guarantee Corporation (HUG) and the Korea Housing Finance Corporation (HF). Many cases move from bridge loans (land acquisition loans) to the main PF through this support."

Construction Performance in April 2024. [Data provided by the Ministry of Land, Infrastructure and Transport]

The official explained that as a result of this process, the increase in housing supply has led to a corresponding rise in unsold homes. Last month, the nationwide housing supply reached 27,973 units, an 86.3% increase compared to the same month last year. The cumulative monthly total was 70,661 units, up 80.1% from the same period last year. Notably, since the supply in March was only 2,764 units, last month saw ten times more units released into the market than the previous month. As such, the surge in supply caused unsold homes to increase by 7,033 units last month, with unsold homes after completion rising by 774 units.

In contrast, the nationwide permits issued last month totaled 27,924 units, down 15.9% from 33,201 units in the same month last year. From January to April, permits totaled 102,482 units, a 21.1% decrease compared to 129,831 units during the same period last year. A Ministry of Land official stated, "Before permits are granted, projects have not yet fully entered the main phase. It seems that permits have decreased because bridge loan projects still carry concerns about PF insolvency."

Last month, nationwide housing transactions totaled 58,215 units, a 22.4% increase from 47,555 units in April last year. The volume of transactions in April had been declining since 2021 but reversed to an increase last month for the first time in three years. The cumulative transactions from January to April were 197,555 units, an 18.4% increase compared to the same period last year.

Meanwhile, last month, Incheon recorded the highest increase in unsold homes nationwide, with 4,260 units, up 1,591 units from the previous month. The unsold homes after completion in Incheon slightly decreased to 611 units last month from 648 units the previous month.

In Daegu, unsold homes decreased from 9,814 units in March to 9,667 units last month. However, unsold homes after completion increased by 21.3% to 1,584 units last month from 1,306 units the previous month.