Busan is good

Busan Metropolitan City Projects a Decline in Unsold Housing Despite Temporary Increase

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Busan Metropolitan City (Mayor Park Heong-joon) announced that unsold housing units are expected to gradually decrease in line with signs of recovery in the city’s housing market.

Looking at unsold housing by district, since April–May this year, unsold inventories in Dong-gu, Nam-gu, Yeonje-gu, Suyeong-gu, Sasang-gu, and Gijang-gun have continued to be resolved. In particular, between May and July, over 50 units of unsold housing were cleared in Dong-gu, Nam-gu, Suyeong-gu, and Gijang-gun.

Indicators of housing market recovery include:

• ●The decline in Busan apartment sale prices, which had continued since June 2022, has stabilized into a flat trend (no significant fluctuations).

• ●Sale prices in some districts have begun to rise.

• ●Apartment sales transactions have increased since January this year.

• ●Jeonse (long-term deposit lease) prices have continued to rise since March last year.

(Source: Korea Real Estate Board, Real Estate Statistics Information System, R-ONE)

Recently, the number of unsold homes has temporarily increased due to large-scale supply of high-priced housing and a slight rise in post-construction unsold units. However, with the normalization of the housing market and rising contract rates, the number of unsold homes is expected to gradually decrease in future statistics.

Post-construction sales: Unlike pre-sales, in which sales begin upon groundbreaking, this system initiates sales after the housing project has reached a certain stage of completion.

The number of unsold homes increased from 5,573 units in July to 7,146 units in August, reflecting the time lag between supply and demand recovery. Additionally, post-construction unsold homes rose from 2,567 units in July to 2,772 units in August, attributed to the increase in post-construction supply.

The temporary rise in unsold homes between July and August is projected to decline in subsequent statistics. Furthermore, unsold units from new housing projects reflected in the data beginning in September are also expected to show a declining trend after an initial temporary increase.

Experts offered the following opinions regarding the outlook for unsold housing in Busan:

• ●Lee Young-rae, CEO of Real Estate Survey, stated, “Although the initial demand for contracts in high-priced apartments was somewhat limited, the large number of applicants has resulted in continued demand even through non-priority subscriptions. As the housing market gradually recovers, the number of unsold homes is expected to steadily decrease.”

• ●Kang Jeong-gyu, Dean of the Graduate School of Real Estate at Dong-A University, said, “Although the recovery of the macroeconomy has been somewhat delayed, positive factors are expanding, such as continued interest rate cuts, balloon effects resulting from the current administration’s regulations on the Seoul metropolitan area, and the growing interest among genuine buyers who feel housing prices have bottomed out. The normalization of the Busan real estate market is expected to become visible more quickly.”

(Balloon effect: Similar to pressing one side of a balloon and causing another side to swell, this refers to buyers moving to other regions due to regulations in certain areas.)

Bae Seong-taek, Director General of the Housing & Architecture Bureau, stated, “The temporary increase in unsold housing is not a structural issue in the housing market but a phenomenon stemming from the time gap between supply and demand. We will continue to actively pursue policies to stabilize the housing market and ensure residential stability for citizens.”