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Last year, the number of housing licenses appeared to have dropped sharply, and a’warning light’ turned on in the future housing supply. Considering that the number of housing licenses is a leading indicator of housing supply, the supply shortage is expected to prolong. The government, which was confident that the housing supply had been sufficiently provided, has turned its current position and is poised to come up with special measures as early as next week, but experts responded that there was nothing to expect without a major shift in the existing policy stance.
Last year, the number of housing licenses announced by the Ministry of Land, Infrastructure and Transport on the 29th was 45,7514 households, which was more than 300,000 households from 760,328 households in 2015, the most recent housing license volume. This is a decrease of 6.2% from the 48,7975 households in 2019, and 28.2% from the previous five-year average (63,7389 households). The number of licenses in Seoul also decreased by 6.6% from the previous year and 30.3% from the average of the previous five years.
The Moon Jae-in administration’s license volume, which determines the future housing supply, has been downhill since the administration’s inception. The number of housing licenses remained at 700,000 households until 2016, but fell to 500,000 in 2018 and 400,000 in 2019. In the last three years (2018-2020), the number of housing licenses has decreased by more than 640,000 to 1.4996,625 households, compared to the 2,14,4817 households in the previous three years. Considering that the number of apartment units sold nationwide is usually around 300,000 households, the license for housing supply for about two years has passed away in the last three years.
The current government has always emphasized that “the supply of housing has increased compared to the previous government, and market concerns over the shortage of supply are excessive.” Former Minister of Land, Infrastructure and Transport Kim Hyun-mi said in his inauguration address in 2017, “I find the cause of the market overheating in the shortage of supply. This attitude continued until July of last year. Former Minister Kim appeared on a radio broadcast in July of last year and emphasized, “There is no shortage of housing supplies, and the number of permits, construction start, and occupancy in Seoul is higher than usual.”
The average number of occupants per year is the basis for the current government’s confidence in supplying housing. The average annual housing and apartment occupancy for the last four years was 547,000 households, up 23.2% from the previous year’s average. Although the current government has more occupancy than the Park Geun-hye administration, it is difficult to see the current government’s achievements due to time lag.
The problem is that the recent declining performance of licenses and permits has an impact on future housing supply. Housing is supplied in the order of license, start of construction, pre-sale, and occupancy. If the license decreases, the amount of occupancy decreases at a time difference. Experts evaluated that’the next three years will be a bigger problem’ based on the amount of housing licenses last year. Professor Shim Gyo-eon of Konkuk University’s Department of Real Estate said, “If the supply of housing is reduced because of the current jeonse crisis, it seems unlikely that the market overheating will be calmed down for the time being.” It is very likely.”
Due to insufficient housing supply, unsold apartments are rapidly exhausting. According to the Ministry of Land, Infrastructure and Transport, the number of unsold homes after completion in December last year was 19,005, down 19.5% from the previous month (23,620). Last year, 2,8792 unsold homes decreased. The number of unsold apartments nationwide is the lowest in 18 years and 7 months after recording 18,766 households in May 2002.
As house prices and rental prices soared, it is said that they encouraged’panic buying’ to buy houses. The panic sentiment of housing consumers that if they can’t buy a house now, the price rises and they can’t live forever. The government has said it will announce special measures for housing supply next week as early as possible, but the market reaction is skeptical. It is difficult to create a reversal without drastic changes to existing policy stances such as regulation of multi-homed people and the period of reconstruction and redevelopment.
Professor Kwon Dae-jung of the Department of Real Estate at Myongji University said, “It is necessary to open a retreat for multi-homed people by easing the transfer tax, and to relieve the breath of the redevelopment/reconstruction area. I don’t think there’s anything more to come out than the plan.”
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