Seoul Metropolitan Area Drops by 4.9 Points,
Provincial Regions See Larger Declines
Apartment Occupancy Rate Also Falls by 6.5 Percentage Points
The nationwide apartment occupancy outlook index declined this month. Although the overall market sentiment has improved due to the inauguration of the new government, anxiety appears to have been triggered by the Trump tariffs and the upcoming implementation of Phase 3 of the stress-based Debt Service Ratio (DSR) regulations next month.
According to the Housing Industry Research Institute (HIRI), a survey of housing businesses found that the nationwide apartment occupancy outlook index for June was 87.9, down 7.2 points from the previous month, as announced on June 12. This index predicts whether people who have purchased apartments will be able to pay the remaining balance and move in as planned. A reading above 100 indicates that more respondents have a positive outlook on the occupancy market, while a reading below 100 indicates the opposite.
By region, the Seoul metropolitan area recorded 94.1, a decrease of 4.9 points. Seoul fell by 10.2 points to 100.0, while Gyeonggi Province dropped by 4.7 points to 92.5. Incheon saw a slight increase of 0.4 points, reaching 90.0.
Among major cities, only Daegu rose, increasing by 2.4 points. Daejeon and Ulsan remained unchanged. Busan and Gwangju declined by 16.7 points and 8.2 points, respectively. In provincial regions, all areas except North Gyeongsang Province, which rose by 5.7 points, experienced declines. Notably, Gangwon fell by 20.9 points, South Jeolla by 19.5 points, and North Chungcheong by 16.7 points, marking significant drops. Sejong decreased by 3.0 points, but still recorded an index of 120.0, the highest in the country.
HIRI explained, "Recently, expectations for economic revitalization following the launch of the new government and declining loan interest rates have improved the overall market atmosphere. However, the emergence of this negative sentiment appears to be due to several factors: uncertainty during the presidential election period, the renewed spread of President Trump's tariff war, and the upcoming implementation of Phase 3 of the stress-based DSR regulations next month, all of which have heightened anxiety among businesses."
Meanwhile, last month’s nationwide apartment occupancy rate was 67.2%, down 6.5 percentage points from the previous month.
The gap in occupancy rates between the Seoul metropolitan area and non-metropolitan areas widened further. The metropolitan area recorded 81.7%, down 1.8 percentage points. Major cities declined by 5.1 percentage points to 60.8%, and other regions dropped by 9.2 percentage points to 66.7%.
Within the metropolitan area, Seoul recorded 83.1%, down 7.9 percentage points, while Incheon and Gyeonggi Province increased by 1.3 percentage points to 81.0%.
The main reasons for unoccupied apartments were delays in selling existing homes (34.0%), failure to secure final balance loans (28.0%), failure to secure tenants (22.0%), and delays in selling pre-sale rights (6.0%), in that order. The two most significant factors?delays in selling existing homes (36.5%→34.0%) and failure to secure final balance loans (28.8%→28.0%)?both decreased slightly from the previous month.
HIRI stated, "As the average interest rate on mortgage loans continues to fall, reducing the financial burden on homebuyers, there is expected to be a temporary surge in last-minute loan demand ahead of the implementation of Phase 3 of the stress-based DSR regulations. However, as household loan management becomes stricter, the ability to secure final balance loans remains a major obstacle to occupancy."
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