Jeju Real Estate Market "Cooling"... Foreign Investors Leave and Auctions Shunned [Real Estate AtoZ]

Housing Price Index Has Fallen Since 2022
Foreign Investment Declines and Unsold Homes Surge
Jeju Records the Lowest Auction Success Rate Nationwide

Jeju Cityscape

The real estate market in Jeju Province is experiencing a deepening downturn. As demand from foreign investors has plummeted and even local residents are leaving Jeju, the number of unsold homes continues to rise. In the auction market, Jeju properties are being avoided, with the auction success rate (the ratio of the winning bid to the appraised value) being the lowest in the country.

According to statistics from the Korea Real Estate Board on December 18, the cumulative change in Jeju’s comprehensive housing sales price index from January to November this year was -1.53%. This decline is 0.75 percentage points steeper than the nationwide provincial average of -0.78%.

Jeju’s annual rate of change turned negative in 2022, recording -0.20%, and has not recovered since. In 2023 and last year, it posted -2.28% and -1.48%, respectively.

The impact of COVID-19 was significant. As foreign investors stopped coming, the housing price bubble in Jeju also deflated. The number of foreigners purchasing multi-unit buildings (such as officetels, apartments, row houses, and multiplex housing) peaked at 756 in 2014. However, this figure shrank to about 490 in 2018 and further dropped to 157 last year. From January to November this year, only 148 foreign buyers have been recorded.

Local residents are also leaving. Jeju’s net outflow of population increased from 1,687 in 2023 to 3,361 last year.

The oversupply of housing has led to a surge in unsold properties. The number of unsold homes, which stood at 1,676 in 2022, rose to 2,499 the following year. As of October this year, the figure stands at 2,542. The number of unsold homes after completion, often referred to as "malignant unsold properties," increased from 1,059 in December 2023 to 1,965 as of October this year.

There are projections that it will remain difficult for the market to recover from this slump. Yoon Sumin, real estate expert at NH Nonghyup Bank, said, "A large volume of unsold properties has accumulated over the past three years, and the high sales prices are still having an impact. Since there is not much demand within Jeju itself, the problem persists."

Jeju real estate is also unpopular in the court auction market. According to the "November Auction Trend Report" released by GGI Auction, a company specializing in auction and public sale data, Jeju's overall auction success rate for all property types last month was 45.5%, the lowest in the country. For residential properties, it was also the lowest at 57.0%. For office and commercial properties, the rate was 42.3%, which was only higher than Ulsan (36.2%) and Jeollabuk-do (38.4%).

Lee Juhyun, senior researcher at GGI Auction, explained, "Regardless of whether it is residential or commercial, the effects of oversupply are evident in the auction market. This phenomenon is becoming more pronounced in the outskirts of Jeju."