New home sales in South Korea plunged 46.2% in January from a year earlier to 7,440, adding to the nation’s stock of unsold properties, according to the Ministry of Land, Infrastructure and Transport.
Transactions in the metropolitan area tumbled 54.2% to 3,617, the ministry said Friday. The number of unsold houses climbed for a third month to 72,624 units at the end of January, up 3.5% from a month earlier.
The government has implemented various measures to address the housing surplus and stabilize the market.
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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.
Source: Bloomberg
