South Korea Residential Real Estate Market – Growth, Trends, Forecast (2021)
The residential real estate market in South Korea is expected to register a CAGR above 11.97% during the forecast period (2022-2027). COVID-19 has brought a huge difference to the residential real estate market in South Korea.
New York, 03 Feb. Sep 28, 2022 (GLOBE NEWSWIRE) — Reportlinker.com Announces Release of Report “South Korea Residential Real Estate Market – Growth, Trends, Forecasts (2021 – 2026)” – https://www.reportlinker.com/p06221846/?utm_source=GNW
The number of private apartments sold in Seoul from January to July 2021 was 1,895 units, down 86 percent from the same period last year (13,782 units). Across the entire metropolitan area, 40,876 households were sold, i.e. only 60% of the same period in 2020 (68,492 households). Due to government price regulation, Olympic Park Avenue Foret (12,032 households, Dunchon Jugong reconstruction) scheduled for sale in 2020 in Dunchon-dong, Gangdong-gu, has not yet been able to schedule the sale . In the case of Seoul, in 2020, the number of permits and permits, which can determine the amount of housing supply in the next three to five years, was reduced to 58,181 households in 2017, half of the level (113,131 households) when the Moon Jae-in government was inaugurated.
In January 2021, South Korea’s Ministry of Finance indicated that expanding housing supply would be a priority, with building regulations in densely populated urban areas being eased and redevelopment projects being supported to stabilize the housing market. The government changed policy direction earlier in 2021, announcing a plan to provide a total of 830,000 housing units nationwide, including 320,000 in Seoul by 2025.
In Asia, South Korea has developed its own green building certification system, the Green Standard for Energy and Environmental Design (G-SEED). which assesses the eco-friendliness of buildings by evaluating eight environmental domains.
Main market trends
The country’s urbanization is driving the market
Asia is urbanizing faster than Europe and North America. It will probably continue to house the majority of the world’s megacities (urban agglomeration areas with more than 10 million inhabitants). Seoul is one of the biggest of them.
The rapid industrialization Korea experienced accelerated migration patterns and population trends from rural to urban areas. The country has experienced unbalanced land distribution and demographic patterns caused by rapid demographic changes since the 1960s called industrialization.
Rapid urbanization and demographic and technological changes are among the trends in cities. These factors contribute to rising housing prices, a shortage of affordable housing, and a limited housing stock in many cities. These problems, in turn, threaten not only the stability of financial markets, but also the quality of life and integration, as well as the competitiveness of cities nationally and internationally.
In response, cities are focusing on creating more housing, including a more diverse range of options so that the housing stock meets the needs of different household types and income levels.
nBy applying the principles of good density of mixed, use and well-connected environments with high quality integrated urban environments, it is possible to create integrated urban environments that cater to a range of incomes and groups of population and contribute to the dynamism and authenticity of a city.
Supply of affordable housing in the country
South Korea ranked third from bottom, with a home affordability score of 3.94 (December 2021). With relatively low wages and high apartment prices, South Koreans can struggle to take their first step on the homeownership ladder. However, once they acquire their home, they will benefit from more convenient utility and internet costs.
As reported in February 2021, South Korea plans to provide 830,000 housing units in Seoul and other major cities by 2025 through housing redevelopment projects led by public agencies, marking the procurement measure at largest scale ever contemplated by the Moon Jae-in administration.
The Ministry of Land, Infrastructure and Transport has announced its real estate plan, which aims to provide affordable housing in major cities to meet demand from young people and cope with soaring housing prices.
Of the 830,000 housing units, 323,000 new homes will be built in Seoul and 293,000 in neighboring Gyeonggi Province and Incheon. The ministry also planned to add more than 220,000 new homes in major cities, including Busan, Daegu and Daejeon, which have seen rising property prices.
nThe focus of the new measure is to get public developers, such as state-owned companies Korea Land and Housing and Seoul Housing & Communities, to cut red tape and create fast-track approval processes to quickly expand l housing supply.
Housing or residential development in South Korea is mostly dominated by utilities, with instructions from the Ministry of Constructions. Housing developments in Korea are mainly undertaken by government agencies, such as the Korea National Housing Corporation and the Korea Land Development Corporation.
Dongbu Corporation, Hines, Shinyoung (Greensys), Korea Land and Housing Corporation, Booyoung Group, and HDC Hyundai Development are some of the major players in the market. The growing construction of residential and affordable homes in the country generates several opportunities for companies in the sector.
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