A "Sales Cliff": Sales of Apartments and Row Houses All Drop

[경향신문]

Apartment complexes fill the view of Yongsan from Namsan Mountain, Seoul on December 27, 2021. Lee Suck-woo

Sales of homes throughout the nation continued to decline, falling by over 10% in a month. The number of sales dropped over 40% compared to the same month last year. A “sales cliff” or a significant plunge in the sales of homes continued due to loan restrictions and the interest rate hike by financial authorities.

According to the November 2021 Housing Statistics released by the Ministry of Land, Infrastructure and Transport on January 4, last November, the sales of a total of 67,159 homes were reported nationwide. This was a 10.8% drop from the previous month (75,290) and a drop of 42.5% from November 2020 (116,758). The accumulated volume of homes sold in January-November 2021 was 961,397, 15.6% fewer than the same period in 2020 (1,139,024).

The drop in sales was marked in the Seoul metropolitan area. In the greater Seoul area, 26,365 homes were sold last November, a drop of 17.6% from October and a drop of 35.9% YoY. The accumulated number of sales until November was 457,654, a drop of 21% YoY. Last November, 7,801 homes were sold in Seoul, a drop of 4.2% from the previous month and a 22.6% drop YoY. The accumulated number of sales until November was 120,440, a drop of 25.5% YoY. The volume of sales dropped more drastically outside the capital area. Outside the Seoul metropolitan area, 40,794 homes were sold in November, a drop of 5.8% from October and a whopping drop of 46.1% YoY.

A closer look at the type of homes showed that the sales of apartments (41,141) dropped significantly, 15.7% from October and 54.1% YoY. The sales of houses other than apartments (26,018) fell slightly by 1.8% from the previous month and 4% YoY. The higher interest rate and tighter restrictions on loans appear to have influenced the sales of non-apartment houses, such as row houses (referred to as “villas” in Korea) and studio flats.

After the Housing Lease Protection Act was enforced last July, the proportion of apartments leased on a monthly rent has constantly increased in Seoul. As of last November, 39.9% of apartment leases in Seoul (accumulated from January to November) were based on a monthly rent. The proportion of apartments leased for a monthly rent increased significantly compared to the recent five-year average (31.9%). Leases based on a monthly rent also accounted for 38.7% (accumulated figure from January-November) of all apartment leases in the Seoul metropolitan area, higher than the 5-year average (34.6%). Meanwhile, outside the capital area, monthly rent-based leases accounted for 36.2% of all apartment leases during the same period, a figure lower than the 5-year average (38.3%).

Last November, the number of unsold houses in the greater Seoul area increased by 14.1% from October (1,290) to 1,472. Outside the greater Seoul area, 12,622 houses failed to find an owner, a 1.3% drop from the previous month (12,785). A regional analysis showed that Daegu had the greatest number of unsold homes with 2,177, followed by Jeollanam-do (1,954), Gyeongsangbuk-do (1,598) and Gyeongsangnam-do (1,346).

The number of unsold houses nationwide gradually decreased since last June (16,289), but began to climb again last October.

The number of houses that were not sold even after construction was completed reached 7,388 nationwide, a 4.5% (352) drop from October (7,740). In the Seoul metropolitan area, there were 609 such houses, a 13.7% (97) drop from October (706). In Seoul, 55 houses failed to find owners for three consecutive months since last August, but the number dropped to 52 in November.

According to the size of homes, medium to large houses exceeding 85m2 accounted for 402 houses, up 1.3%, while houses that were 85m2 or smaller accounted for 13,692 houses, up 0.1%.