Stubborn Unsold Housing Units Top 30,000, Highest in 14 Years
As of the end of February, 'stubborn unsold housing' units – homes that have already been completed but remain unsold – reached 31,307, the highest level in 14 years, since March 2012. This figure indicates that while the total number of unsold homes has slightly decreased, the phenomenon of completed homes failing to sell is intensifying. Nationwide, total unsold housing stood at 66,208 units at the end of February, a marginal decrease from the previous month. Of these, 31,307 units were completed but unsold. A significant 86.3% of these, totaling 27,015 units, were concentrated in provincial areas outside the Seoul metropolitan region. By region, Daegu recorded 4,296 units, Gyeongnam 3,629, Gyeongbuk 3,174, Busan 3,136, and Chungnam 2,574 units.
On May 10, the Korea Land and Housing Corporation (LH) announced its third tender to purchase unsold apartments in provincial areas, initiating the acquisition of an additional 5,000 units. The target for this third purchase by LH is apartments in provincial areas, excluding the Seoul metropolitan region. Lee Ki-bong, Director-General for Housing Welfare Policy at the Ministry of Land, Infrastructure and Transport, stated that LH's purchase of unsold apartments would be utilized to support housing for provincial workers. Including the 3,000 units purchased last year and the current 5,000 units, LH's direct acquisition will amount to approximately 8,000 units. However, analyses suggest that public purchases alone may not be sufficient to resolve the accumulated backlog of completed unsold homes in provincial areas. Furthermore, there may be discrepancies between construction companies' expected prices and the prices calculated for acquisition, as well as stringent purchase criteria. Industry insiders are watching to see how many units will actually translate into sales contracts.
The Korea Housing Finance Corporation (KHFC) has raised the mortgage guarantee limit for corporate restructuring (CR) REITs purchasing unsold provincial housing from 60% to 70% of the appraised value. Nevertheless, opinions suggest that an expanded guarantee alone may not fundamentally improve project feasibility. Without a recovery in the provincial housing market, CR REITs may struggle to guarantee exit strategies through resales after acquisition, and the timing for asset price recovery remains uncertain.