According to the Ministry of Land, Infrastructure and Transport on the 27th, nationwide housing permits totaled 379,000 units last year. Of those, non-apartment homes accounted for just 8.7%, or 33,061 units. Seoul had the highest non-apartment share at 15.5%, but of its 6,442 permitted units, multi-family homes made up 5,108, or 79%.
The decline reflects a long-running structure in which both the private sector and the government favor apartments for efficiency, infrastructure and liquidity. As that preference has hardened, supply of non-apartment types such as detached, multi-household and row houses has effectively stalled.
Broader supply indicators are also weakening. Total housing permits fell from 740,000 households in 2016 to about 410,000 recently, and Seoul’s permit volume has also dropped by about half. Because permits typically translate into move-ins three to five years later, analysts say a medium- to long-term supply decline is likely. Starts and presales have also fallen, tightening the pipeline across multiple stages.
For builders, non-apartment projects offer thinner margins. Surging construction costs have raised burdens, and small-scale projects make it difficult to achieve economies of scale. With financing conditions worsening and tax burdens such as acquisition and comprehensive real estate taxes adding pressure, demand has also concentrated on owning a single apartment rather than multiple homes.
Falling demand is reshaping the rental market. As more tenants avoid jeonse, preference has shifted toward monthly rent, putting upward pressure on monthly rents for non-apartment homes. Combined with a weakening apartment jeonse market, tenants’ housing costs are rising.
The shift is also eroding the role non-apartment housing has played as a “housing ladder.” In the past, tenants often used jeonse in non-apartment homes to build savings before moving to an apartment. With the market moving toward monthly rent, asset-building has become harder, and housing burdens for vulnerable groups are increasing, critics say.
Byun Chang-heum, a professor of public administration at Sejong University, said current rules on parking and sunlight rights mean “places where you can build have already been built out.” He added that “prices fall as demand declines, but regulations stay the same and construction costs rise, so the business case doesn’t work.”
Byun said rising building costs have created a mismatch in which both supply and demand fail to align. He also said policies that convert non-apartment areas into apartments take a long time and face limits because alternatives for existing residents are insufficient.
As an alternative, Byun proposed mid-rise, high-density housing. “In a structure split between low-rise neighborhoods and high-rise apartments, mid-rise high-density complexes can be a realistic option,” he said, calling for eased building, urban planning and parking rules and incentives to improve feasibility. He said the floor area ratio for redevelopment projects, now around 250%, should be raised to about 400%, along with institutional changes such as easing consent requirements.
Park Won-gap, senior real estate specialist at KB Kookmin Bank, cited rising construction costs, financing difficulties and the fallout from so-called “underwater jeonse” as key factors behind the supply contraction. “To revive the non-apartment market, policy design should separate apartments and non-apartments,” he said. “Overall housing stability is possible only if the non-apartment market survives.” He added that expanding tax benefits for non-apartment housing could also be considered.
* This article has been translated by AI.
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