September Apartment Occupancy Outlook Plummets in Jeju and Jeonnam: "Record-High Unsold Units"

Nationwide Apartment Occupancy Outlook Declines Across the Board
"Stronger Household Loan Controls and Higher Taxes for Non-Resident Homeowners"
Gwangju Sees Positive Outlook on Hopes for Industrial Vitalization and Increased Investment

The nationwide outlook for apartment occupancy in September declined across the board. The burden of inventory increased in provincial regions as a large volume of move-ins became concentrated there, and housing transactions weakened nationwide, influenced by stronger household loan regulations and tighter overall loan management.

Apartment complex in Bundang-gu, Seongnam, Gyeonggi-do. Yonhap News Agency

According to a survey conducted by the Housing Industry Research Institute on housing business operators on September 10, the nationwide apartment occupancy outlook index for this month was 87.6, down 6.8 points from the previous month. This index is a metric estimating whether individuals who purchase apartments will be able to pay the balance and move in without issue. An index above 100 indicates that a majority have a positive outlook on the occupancy market, while a value below 100 suggests the opposite.

By region, the index dropped by 8.4 points in the metropolitan area, by 1 point in the major cities, and by 10.8 points in the provinces.

The decline was particularly pronounced in the provincial regions. The index fell by 26.2 points in Jeju, 22.3 points in Jeonnam, 15 points in Gangwon, and 14.3 points in Chungbuk.

The Housing Industry Research Institute explained, "Jeju recorded an all-time high in unsold units after completion, increasing inventory burdens, while in Jeonnam, around 3,000 households are scheduled to move in between September and October, concentrated around Jangseong, leading to a significant short-term supply glut and a marked decline in the occupancy outlook." They added, "However, in some regions, the outlook may improve in the future as gaps in scheduled move-ins could help absorb previously unoccupied or unsold inventory."

Within the metropolitan area, the index for Seoul dropped by 9.4 points and Incheon by 18.5 points, whereas Gyeonggi Province saw a modest increase of 2.7 points.

The Institute analyzed, "Due to increased uncertainty from tighter aggregate household loan management and strengthened tax regulations on non-residential single-homeowners, housing transactions have slowed and a wait-and-see sentiment has grown, particularly in core districts such as Gangnam and the Han River belt. However, a balloon effect—in which demand shifts to outer Seoul and southern Gyeonggi—has somewhat limited the extent of the drop in the metropolitan area's occupancy outlook."

Among the major cities, Busan and Daejeon saw declines of 8.8 points and 7.1 points, respectively. In contrast, Gwangju rose by 7.1 points, and Daegu by 3.2 points. Ulsan and Sejong remained unchanged at 100.

The Institute commented, "The positive outlook in Gwangju appears to reflect expectations for enhanced regional industrial activity and increased investment. For Daegu and Sejong, the substantial reduction in supply pressure due to the lack of scheduled move-ins through the first half of next year has positively affected the occupancy outlook." They further noted, "From January 2023, Daegu has suspended approvals for new housing development projects as part of policy-driven supply control, and some regions, such as North Gyeongsang, South Gyeongsang, and South Chungcheong, saw a reduction of over 50% in housing construction starts compared to the previous year."

Meanwhile, the national apartment occupancy rate last month was surveyed at 59.5%, down 8.6 percentage points from July. The rate in the metropolitan area fell by 4.6 percentage points, while the four major cities outside the metropolitan area (plus Gwangju and Sejong) dropped by 3.4 percentage points, and other areas plunged by 16.9 percentage points.

The chief reasons for non-occupancy were: inability to secure balance loans (37.2%), delays in selling existing homes (31.4%), inability to secure tenants (15.7%), and delays in selling pre-sale contracts (5.9%).

The Institute concluded, "Since July, with stricter control on aggregate household loans, financial institutions have adopted a conservative attitude toward lending, making it difficult for buyers to secure move-in funds through balance loans, which has led to a drop in occupancy rates nationwide."

This content was produced with the assistance of AI translation services.