Seoul Housing Transactions Fall Below 10,000 in 3 Months... Increase in Malignant Unsold Units in Provinces

House Price Growth Slows and Loan Regulations Impact
Unsold Homes After Completion Increase for 14 Consecutive Months
Housing Supply Leading Indicators Permit and Groundbreaking Lag

Amid a nationwide slowdown in the rise of housing prices, apartment transaction volumes in Seoul decreased by 34.9% compared to the previous month. Although the total number of unsold houses slightly declined, the number of post-construction unsold houses classified as problematic increased by 4.9% from the previous month, surpassing 17,000 units.

Apartment buildings in downtown Seoul / Photo by Yonhap News

According to the 'September Housing Statistics' released by the Ministry of Land, Infrastructure and Transport on the 31st, the number of housing transactions in Seoul last month (based on the reporting date) was 8,206, down 25.3% from the previous month (10,992). The figure, which had exceeded 10,000 units for the first time in 2 years and 11 months in July, collapsed within three months. Among these, apartment transactions dropped sharply by 34.9% to 4,951 units in just one month.

The Ministry of Land, Infrastructure and Transport attributed this to the slowdown in the rate of housing price increases. According to the Korea Real Estate Board, the rate of change in Seoul apartment prices narrowed from 1.27% in August to 0.79% in September.

Nationwide, apartment price increases last month were 0.23%, down 0.1 percentage points from the previous month (0.33%). Following this trend, nationwide housing transactions last month totaled 51,267, a 15.5% decrease from the previous month (60,648). In the same period, transactions in the metropolitan area were 25,829, down 21.2%, and in provincial areas 25,438, down 8.7%.

A Ministry official said, "Although the situation is better than last year, the strengthening of loan regulations and the resulting diminished expectations for rising housing prices seem to have led to a corresponding decrease in transaction volumes."

Last month, nationwide rental and lease transactions also decreased by 9.2% to 190,146 from 209,453 in the previous month. Jeonse (long-term lease) transactions fell by 7.5% to 81,595 units, and monthly rent transactions decreased by 8.8% to 108,551 units. From January to September this year, the share of monthly rent transactions in total rental and lease transactions was 57.4%, up 2.3 percentage points compared to the same period last year.

Post-construction unsold houses, mainly accumulating in provincial areas, increased by 4.9% from the previous month to 17,262 units nationwide. This number has been rising for 14 consecutive months since August last year.

Post-construction unsold houses in the metropolitan area, including Seoul, rose by 2.3% from 2,821 units to 2,887 units. Provincial areas saw a 5.4% increase. Jeollanam-do had the highest number at 2,558 units, and Jeollabuk-do showed the largest month-on-month increase at 106.2%.

The total number of unsold houses was 66,776 units, marking a decrease for the third consecutive month. After staying in the 70,000-unit range for four consecutive months since April (71,997 units), the figure dropped to the 60,000-unit range. While the metropolitan area saw an increase of 1,282 units, provincial areas decreased by 2,056 units, resulting in an overall decline. The proportion of provincial unsold houses in the total also fell below 80%.

Meanwhile, housing supply indicators showed continued increases in sales and completions, but leading indicators such as permits and construction starts were sluggish.

In September, nationwide housing permits totaled 18,486 units, down 35.1% from the previous month (28,478 units). Compared to the same month last year (27,498 units), it decreased by 32.8%. In the metropolitan area, permits last month were 4,924 units, a sharp drop of 69.6% from the previous month (16,189 units) and 63.2% from the same month last year (13,391 units).

Construction starts were 20,983 units, down 29.5% from the previous month (29,751 units). In the metropolitan area, construction starts fell 58.1% from 21,849 units to 9,145 units. In provincial areas, however, they increased by 49.6% from 7,911 units to 11,838 units during the same period. Compared to the same month last year (14,224 units), construction starts increased by 47.5%.

Sales and completions showed an upward trend. Sales in September were 20,404 units, up 26.9% from the previous month (16,077 units) and 43.1% higher than the same month last year (14,261 units). Completions were 42,224 units, an 8.7% increase from the previous month (38,844 units) and a 59.8% rise compared to the same period last year (26,420 units).