South Korea Home Sales Slump in January as Unsold Units Pile Up

The South Korean housing market has been grappling with a surge in unsold units, with the number of unsold housing units nationwide reaching 70,173 at the end of December 2024. This marks a 7.7% increase from the previous month and a 12.3% increase from the end of 2023. The rise in unsold units has put downward pressure on housing prices and decreased demand for new housing, as potential buyers wait for better deals.

The increase in unsold units has been particularly pronounced in the Seoul metropolitan area, where the number of unsold units increased by 16.2% from the previous month to 19,748 households. This trend has been driven by a large number of unsold houses in Pyeongtaek, Gyeonggi Province, which has seen a significant increase in unsold housing units due to a large number of unsold houses in the area.

The number of provinces (52,876 households) decreased by 0.6% from the previous month, but the number of unsold units after completion, classified as malicious unsold, was 22,872 at the end of last month, up 6.5% from the previous month. This is the largest number in 11 years and three months since October 2013 (23,306 households).

The government has implemented various measures to address the housing surplus and stabilize the market. The Korea Land and Housing Corporation (LH) has announced plans to purchase 3,000 unsold apartments in provincial areas to repurpose them as "Secure Jeonse Housing," offering tenants the opportunity to pay only 90% of the market rent. Additionally, the government has committed to investing 4.3 trillion won in railway underground projects in Busan, Daejeon, and Ansan to stimulate regional development and improve transportation networks.

However, the market response to these measures has been lukewarm, with industry experts suggesting that tax benefits such as easing acquisition tax and capital gains tax, which have been demanded by the industry, are missing. LH purchases are also considered small, indicating that more significant efforts may be required to address the housing surplus and stabilize the market.

In conclusion, the South Korean housing market is facing a significant challenge with the rise in unsold housing units, particularly in the Seoul metropolitan area and other regions. The government's efforts to address the housing surplus and stabilize the market have had some impact, but the market response suggests that more significant measures may be required to effectively address the issue. As the market continues to evolve, it will be crucial for the government and industry experts to work together to develop and implement effective strategies to stabilize the housing market and meet the needs of both buyers and sellers.