Housing Market from January to May: 'Permits Down 24%, Construction Up 31%, Sales Up 95%'

Ministry of Land, Infrastructure and Transport Announces 'May 2024 Housing Statistics'

Seoul Apartment Transactions Reach 5,182 Units
Highest in 3 Years and 3 Months

Unsold Houses Total 72,129 Units as of End of May
0.2% Increase from Previous Month

From January to May this year, the volume of housing permits decreased by 24% compared to the same period last year. The sharp rise in construction costs and the downturn in the real estate market made financing difficult, leading to a reduction in permit applications. On the other hand, housing starts increased by more than 30% during the same period, thanks to government agencies' real estate project financing (PF) guarantees, and pre-sales nearly doubled.

On the 28th, the Ministry of Land, Infrastructure and Transport released the 'May 2024 Housing Statistics' report containing these details. The cumulative housing permits from January to May totaled 125,974 units, down 24.1% from 165,896 units in the same period last year. However, housing starts reached 106,537 units, up 31.4% from 81,083 units in the previous year. Pre-sales were 90,840 units, a 94.6% increase from 46,670 units in the same period last year.

Comparing May statistics with the same month last year, permits decreased while starts and pre-sales increased. May housing permits were 23,492 units, down 34.9% from 36,065 units in May last year. Housing starts were 17,340 units, up 41.3% from 12,269 units in May last year. Pre-sales in May reached 20,179 units, soaring 171.3% from 7,439 units in the same month last year.

Han Seong-su, head of the Housing Policy Division at the Ministry of Land, Infrastructure and Transport, explained, "The rise in construction costs and difficulties in financing have made it challenging to start new housing construction projects, resulting in fewer permit applications compared to last year."

He added, "The increase in housing starts is because projects that had only obtained permits in the past but had not begun construction are now starting work. With the Housing and Urban Guarantee Corporation (HUG) and Korea Housing Finance Corporation (HF) providing guarantees for main PFs, many projects are transitioning from bridge loans to main PFs, leading to an increase in housing starts." Since pre-sales begin alongside housing starts, pre-sale volumes have also increased accordingly.

The cumulative number of completed housing units from January to May was 183,638, a 16.5% increase from 157,583 units in the same period last year. However, May alone saw 29,450 completions, down 12.7% from 33,720 units in May last year.

Meanwhile, the total number of housing sales transactions in May was 57,436, a 1.3% decrease from the previous month. However, the cumulative total from January to May was 254,991 transactions, up 14.9% from 222,016 transactions in the same period last year. Notably, apartment transactions in Seoul (based on reporting date) numbered 5,182, increasing 7.1% from the previous month and 39.3% from the same period last year. Last month's transaction volume was the highest in 3 years and 3 months since February 2021 (5,435 transactions), a period of rising real estate prices.

The volume of jeonse and monthly rent transactions (based on reporting date) totaled 227,736, down 7.2% from the previous month. The cumulative total from January to May was 1,231,289 transactions, a 1.4% decrease from 1,248,399 transactions in the same period last year.

As of the end of May, unsold housing units totaled 72,129, a 0.2% increase from the previous month. 'Post-completion unsold' units, classified as problematic unsold housing, numbered 13,230, up 2.0% from the previous month. Han explained, "The increase in unsold units appears to be due to the rise in pre-sale volumes," adding, "The government has completed measures to exclude post-completion unsold houses in local areas from the housing count for tax calculations to support resolving local unsold housing."

He continued, "Measures have also been implemented to exempt acquisition tax surcharges when corporate restructuring real estate investment trusts (CR REITs) purchase local unsold housing," and shared the atmosphere, saying, "A recent preliminary demand survey for CR REITs purchasing unsold apartments showed strong industry interest."