Unsold completed homes in South Korea — often called “distressed” inventory — have climbed above 30,000 units, with the increase concentrated in non-capital regions and mid- to large-size housing, widening structural imbalances in the market.
An analysis of the Ministry of Land, Infrastructure and Transport’s unsold-housing data for the past five years showed that as of February, the number of unsold homes after completion stood at 31,307 units, extending a record high for a sixth straight month. The share of completed units among all unsold homes also jumped to 47.3% from 11.3% in 2023.
The rise has been most pronounced in larger floor plans. Unsold mid-size homes (60 to 85 square meters) totaled 20,524 units, or 65.6% of the total. Large homes (over 85 square meters) reached 4,960 units, up 107% from a year earlier, the steepest increase among size categories. Smaller units (40 square meters or less and 40 to 60 square meters) fell or held steady, suggesting they are being absorbed by end-users.
Regional gaps were also clear. Jeju (36%), Daegu (31%) and Ulsan (30%) had high shares of units over 85 square meters, while Seoul’s unsold inventory was 94% small units. As unsold homes pile up outside the capital area, the backlog is increasingly concentrated in mid- to large-size housing.
The pattern reflects demand clustering in smaller, more affordable homes. Analysts cited high interest rates, tighter lending rules and shifting household structure — including more one- and two-person households — as drivers of weaker demand for larger units.
A construction company official said buyers tend to avoid mid- to large-size homes as prices rise with floor area, especially when households are small. With investment demand fading and the market shifting toward owner-occupiers, the official said, unsold mid- to large-size homes are increasing in regional markets.
The burden of distressed inventory is heavily concentrated outside the capital area. Of all unsold completed homes, 27,015 units — 86.3% — were in non-capital regions, with large year-on-year increases in South Chungcheong Province (65.5%), Busan (58.5%) and Incheon (44.2%).
The backlog is feeding stress in the construction industry. The Construction Industry Knowledge Information System, known as KISCON, reported 1,088 closure filings in the first quarter, up 17.6% from a year earlier, with about 60% coming from non-capital firms.
The Korea Research Institute for Construction Policy said the rise in closures reflects a structural shift, not a routine cycle, as financially weak companies make up a larger share of the industry. It pointed to higher financing costs from rising rates, a construction downturn and worsening profitability from accumulated unsold homes, compounded by a global slowdown and growing unpaid construction receivables.
Song Seung-hyeon, head of City and Economy, said closures are being driven by a combination of regional unsold inventory, rising construction costs and heavier financing burdens. With sluggish sales blocking cash recovery, he said, higher material and labor costs and high interest rates are spreading a liquidity crunch, especially among smaller builders. He called for expanded purchases of unsold homes, support for project-finance funding and measures to stabilize construction costs, alongside restructuring of troubled projects.
* This article has been translated by AI.
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