[Exclusive] Gwangju Real Estate Market in Emergency Mode... "Only Listings Are Piling Up"

Inquiries at Real Estate Agencies Drop Due to Expected Price Decline
High Housing Supply Rate and Apartment Ratio Are Also Key Factors
Bank of Korea Gwangju Jeonnam Branch: "Housing Purchase Sentiment Weakening"

"Who would buy a house in these times when uncertainty just keeps growing?"

On the morning of the 26th, at a real estate agency office in Seo-gu, Gwangju, the agency head, identified as Kim, showed the reporters a faded real estate transaction ledger. The only entries for this month were five lease contract renewals.

Having run his agency in the same neighborhood for over 20 years, he said, "I've never seen a year like this. Not just this month, but for the whole year, the number of sales contracts barely reaches double digits. Even the occasional customers asking about leases have gradually stopped coming," adding, "Every day feels like martial law."

The situation was similar at other real estate agencies. Most of the places visited were quiet, with no customers in sight. Gathering their opinions, they said, "Even when there are inquiries about sales, they rarely lead to actual transactions," and, "Since the December 3rd martial law, the government's real estate measures have effectively stalled, and with ongoing uncertainty, who would buy a house?"

A real estate agency in downtown Gwangju. Photo by Song Bohyun

Reflecting this situation, the housing market in Gwangju has recently been unable to escape its slump.

According to the Bank of Korea Gwangju-Jeonnam Branch's report released that day on the causes of the housing market slump and future outlook, both housing sales and lease prices, as well as transaction volumes, have decreased in Gwangju, while the number of unsold homes has surged, indicating a decline in home-buying sentiment.

Among these factors, the prevailing outlook for falling home prices was cited as a major reason on the demand side. Since the second half of 2022, expectations of declining home prices in Gwangju have increased, negatively impacting demand. During the same period, competition rates for new apartment subscriptions also dropped overall.

The high housing supply rate and the proportion of apartments were also cited as causes. The housing supply rate refers to the ratio of the number of homes to the number of general households, serving as an indicator of local housing supply. Gwangju's housing supply rate was 105.2% (2022), the second highest among the six metropolitan cities, and the proportion of apartments among homes was 81.5% (2023), the highest among the six cities.

Other supply-side factors included the continued sales by local construction companies, private park development, a large number of construction firms relative to the size of the local construction market, the downturn in the housing market, and the high economic sensitivity of housing supply.

Experts predict that the supply-demand imbalance will ease somewhat in the short term, leading to a slight recovery, but structural factors will be difficult to improve immediately.

Joo Moonseok, head of the Bank of Korea Gwangju-Jeonnam Branch, explained, "It is necessary to consider supporting business transitions for construction companies with continued poor performance and difficulties in management improvement, as well as providing financial support for construction firms facing temporary liquidity issues despite having sound business prospects."

He added, "It is necessary to change the form of housing supply to match changes in housing demand due to population shifts," and, "To meet the growing housing demand from single-person households, the current focus on medium and large apartments should shift toward increasing the supply of small apartments and non-apartment housing."