Despite 19 Consecutive Months of Rising Home Prices in Greater Seoul, Permits Decline and Unsold Units Increase

Greater Seoul Area Permits Down 3.9% Year-on-Year

Apartment Supply Down 6.5% Compared to Last Year

Imbalance Between Supply and Demand Indicators Deepens

During the third quarter of this year, while housing prices continued to rise nationwide, the number of housing permits and transactions in the greater Seoul area declined, and the number of unsold homes increased again. Despite rising prices and improved buyer sentiment, the supply and transaction indicators remained weak, exacerbating the imbalance between various market indicators.

Apartment view of Gangnam area from the Lotte World Tower Sky Observatory in Songpa-gu, Seoul. Photo by Dongju Yoon

According to the real estate market trends report for the third quarter recently published by the Korea Research Institute for Construction Policy, housing prices in the greater Seoul area have been on an upward trend for 19 consecutive months since February of last year. Last month, the monthly housing price growth rate in the greater Seoul area was 0.69%, lower than the previous month's 0.97%, but the upward trend persisted.

Apartment prices in non-metropolitan regions also continued to rise. Last month, apartment prices in these regions increased by 0.11% compared to the previous month’s 0.17%. While the growth rate slowed, prices in the five major metropolitan cities in the provinces rose, marking 16 consecutive months of increases since May last year.

Despite these price increases, the housing transaction volume in July indicated a correction phase, with the greater Seoul area (35,000 units) and non-metropolitan regions (28,000 units) down by more than 10% and 4.4%, respectively, compared to the previous month.

Leading indicators for housing supply, such as permitting figures, also decreased. From January to July this year, a cumulative total of 142,328 housing units were approved nationwide, down 7.9% from the same period last year. The decline was particularly noticeable in the greater Seoul area and the eight provinces, excluding the five major metropolitan cities. Permitting in the five major provincial metropolitan cities increased by 31.6% year-on-year to 42,700 units during the same period. In contrast, the greater Seoul area and the eight provinces posted 80,586 units and 19,042 units, down by 3.9% and 50.3% year-on-year, respectively, driving the overall decrease.

The number of newly supplied residential units also fell, especially in the greater Seoul area. Last month, the number of apartments put on the market in the greater Seoul area stood at 12,980 units, down 6.5% from 13,875 units a month earlier.

The burden of unsold homes also increased. As of July, there were 68,217 unsold units nationwide, higher than the previous month. Of these, the greater Seoul area accounted for 19,459 units, a significant increase from 13,283 units in the same month last year. The number of "unsold after completion" units, referring to housing not sold even after construction is completed, approached 30,000 nationwide, with 85% of these concentrated in non-metropolitan regions.

Kim Seonghwan, a research fellow at the Korea Research Institute for Construction Policy, stated, "In the third quarter, the rise in prices and improved buyer sentiment in the greater Seoul area continued, but transaction volume and permitting saw corrections, resulting in marked discrepancies between market indicators. With the persistently high level of post-completion unsold homes in the provinces, policy attention is required to address regional supply-demand imbalances."

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