National Apartment Shortage to Last Until 2012

An apartment shortage of 30,000 to 70,000 units per year is expected through 2012, a think tank said in a report released yesterday.

Kim Hyeon-ah of the Construction and Economy Research Institute of Korea, the author of the report, said the number of housing units supplied by private construction companies has largely shrunk due to a ceiling in housing prices.

Annual housing demand nationwide between this year and 2012 will be an estimated 420,000 to 440,000 units, including demand created by the reduction of 150,000 units a year.

In contrast, the expected annual number of approved housing units nationwide will be 340,000 this year, 350,000-380,000 in next year and 2011, or 20,000 to 90,000 short of demand a year.

The number of new units is projected to slightly rise to 300,000 through next year, but is expected to go downhill from 2011, which could cause a shortage of 30,000 to 70,000 a year.

The expected shortage in apartment supply for the three years following next year is blamed on the global economic crisis that began in the second half of last year, and the suspension of apartment supply by construction companies due to the price ceiling on private building lots.

Making the shortage worse is the fact that more than half of new housing units in the Seoul metropolitan area over the next three years will be concentrated in suburban areas while supply is slow in urban areas due to changes in economic conditions or regulations.

Kim said, “Even if the government supplies new housing in Seoul suburbs, residents can start moving in only after 2012. Therefore, urban areas suffering from shortages are likely to face worse shortage until 2012.”

baltika7@donga.com