Seoul Apartment Permits Up 74%... Land Ministry: "Supply-Demand Conditions to Improve in 2028"

The government said the housing market could stabilize over the medium to long term, citing falling apartment prices in Seoul's Gangnam and Seocho districts and improvements in leading indicators of housing supply. It forecast that supply-and-demand conditions would improve starting in 2028, when move-ins at the third-phase new towns gain momentum. In the short term, however, it expects market uncertainty to persist as opposing factors, including a decline in new housing completions and rising interest rates, come into play.

On October 18, the Ministry of Land, Infrastructure and Transport said supply indicators were improving and signs of price stability were emerging in some areas, following the effects of last year's September 7 housing supply expansion plan and October 15 housing market stabilization measures, as well as this year's August 13 plan to accelerate housing supply.

Leading supply indicators, including housing permits and construction starts, have improved. In Seoul, 36,000 homes received permits over the past six months, from March through August, up 74% from the same period a year earlier. The figure also exceeded the long-term average of 28,000 homes for 2016-2025. Construction started on 17,000 homes over the same period. Although this was below the long-term average of 31,000, it was up 45% from a year earlier.

Apartment complexes seen from Namsan in Seoul on the 13th, as Seoul apartment prices near a record-long streak of increases. Yonhap News Agency

Some signs of stability have also emerged in price and transaction indicators. Apartment sale prices in Gangnam and Seocho districts have fallen for 10 consecutive weeks, while the rate of increase in Seoul apartment prices has slowed since July. Although apartment sales transactions in Seoul have generally declined since May, the number of listings has risen 30% from the beginning of this year to about 74,000. The consumer sentiment index for Seoul's housing sales market has also fallen since July.

The government said, however, that it was difficult to be optimistic about the market in the short term. Factors that could drive prices higher include a decline in housing completions, rising household income, increased purchasing power amid strong performance in industries such as semiconductors, and expectations of further home price increases. By contrast, an increase in the benchmark interest rate and rising mortgage rates could put downward pressure on prices, making it necessary to closely monitor market conditions, the government said.

The government expects the effects of expanded housing supply to become evident over the medium to long term. It said housing supply-and-demand conditions could improve significantly from 2028 as move-ins at the third-phase new towns gain momentum, alongside an increase in permits and construction starts in both the public and private sectors.

The government also cited demographic changes and balanced regional development policies as factors that could contribute to stability. Seoul's household growth rate slowed from 2.20% in 2020 to 0.83% last year. The Ministry of Land, Infrastructure and Transport said its analysis suggests the number of households in Seoul could begin to decline after 2038. It added that, as national balanced development policies such as the Five Mega-Regions and Three Special Self-Governing Provinces initiative and the second relocation of public institutions gather pace, demand for housing currently concentrated in the Seoul metropolitan area could be redistributed to other regions.

Regarding the recent decline in homes available for monthly and long-term leases, the ministry said the issue was not limited to specific areas but reflected a nationwide housing supply shortage. It said the decline in rental listings had been ongoing since 2024 and attributed it mainly to the sharp drop in housing completions that began in earnest last year. Supply-and-demand imbalances have been particularly pronounced in the Seoul metropolitan area, where the housing supply ratio is below 100%, the ministry said.

The ministry said, "We will closely monitor market conditions, maximize stabilizing factors such as expanded supply, and minimize factors that create uncertainty. We will do everything we can to respond to market changes in a timely manner and ensure stable housing for the public."

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