Last Year’s Supply of Housing in Seoul Sharply Dropped by 50 Percent

It has turned out that the supply of homes throughout the country last year decreased sharply, and that housing construction in Seoul dropped to below the usual amount.

This seems to be a result of the overall economic depression and various real estate regulations. It was pointed out that home prices may rise again in the long term as the supply for homes drops, so measures must be taken.

According to the 2004 Housing Construction Results (based on authorization) report presented by the Construction and Transportation Ministry on Thursday, January 27, last year’s housing construction was for a total 464,000 homes, dropping by 20.8 percent from the 585,000 homes built in 2003.

The government originally planned to build 520,000 homes, but the actual number was 11 percent lower than this figure.

Only 58,000 homes were built in Seoul last year, dropping by half (49.8 percent) from 2003. This is also 47.2 percent lower than the five-year average (110,000 homes) from 1999 to 2003.

When classifying by the home type, apartments decreased by 13.6 percent from 469,000 homes in 2003 to 405,000 homes for last year, and multi-family homes by 49.5 percent from 116,000 homes to 59,000 homes.

When housing construction authorizations decrease, and considering the construction period, experts are analyzing that the actual supply of homes will drop in two to three years, and may result in unstable home prices.

Jang Jeong-su, research director at the Korea Housing Institute, said, “There are many causes for home prices to rise, such as the overall economic slowdown and the finance situation of the market, but basically, it is because supply cannot keep up with demand. It is time for the government to set measures to increase homes, such as increasing home lots and alleviating various regulations.”

Kwang-Hyun Kim kkh@donga.com