The South Korean government's housing policy is increasingly focused on Seoul and the surrounding metropolitan area. Following the August 13 measures, which announced plans to supply over 230,000 additional homes in the capital region, discussions are underway regarding the use of some land in Yongsan Park for housing development. In contrast, the situation in regional markets varies significantly, yet the government continues to apply a one-size-fits-all approach aimed at resolving unsold homes.
According to the Ministry of Land, Infrastructure and Transport, the government is concentrating its policy efforts on accelerating supply by securing new public land in the metropolitan area, expediting construction projects, and providing financial support.
In the provinces, measures such as expanding the purchase of unsold homes after completion and offering tax and financial support are being implemented. However, these initiatives are largely applied under the broad category of 'regional unsold homes,' leading to calls for more tailored responses that consider local market conditions. The circumstances differ greatly between areas with accumulating unsold homes, those with decreasing inventory, and regions with almost no unsold properties.
As of the end of June, there were 29,786 unsold homes nationwide, with approximately 84% located in provincial areas. Regions like Chungcheongnam-do and Gyeongsangbuk-do are experiencing a 'congested market' due to overlapping new supply and existing inventory, while Daegu and Gyeongsangnam-do still have high levels of inventory but are seeing a decline. In Sejong, the total number of unsold homes is just 43. Although the overall unsold homes in Busan have decreased, the number of unsold homes after completion has actually increased, complicating market assessments based solely on inventory levels.
A real estate industry insider stated, "The treatment for regions like Busan, which face significant burdens from unsold homes after completion, cannot be the same as for Sejong, where unsold home issues are minimal. Policies need to be more nuanced to reflect the market conditions in each region."
Experts advise that the intensity of support should vary based on the level of risk associated with unsold homes. Areas with increasing unsold homes should receive priority for liquidity support, while regions facing greater risks should see enhanced measures such as tax incentives or public purchases.
Conversely, uniformly restricting new permits and construction in areas where unsold homes are being absorbed could lead to a supply gap in the coming years once the current unsold home issues are resolved.
Hwang Kwan-seok, a senior researcher at the Korea Research Institute for Human Settlements, emphasized the need to support suppliers with liquidity assistance during the initial stages of concern, and to escalate responses to include demand support and unsold home purchases as risks increase.
It has also been pointed out that addressing unsold homes is merely a measure to manage existing housing inventory and does not create new housing demand. In a situation where the population is declining, simply increasing tax reductions or home purchases will not generate sustainable demand.
Shin Yong-sang, a senior researcher at the Korea Financial Research Institute, stated, "Revitalizing the regional real estate market ultimately requires developing key cities in each region to enhance infrastructure such as transportation, hospitals, and education, as well as fostering specialized industries to create jobs."
There are also concerns about the public sector uniformly absorbing unsold homes. If the resolution of unsold homes relies on public purchases without price adjustments or improvements in project viability by construction companies, it could weaken market functions.
Cho Jeong-hun, chair of the Land and Housing Committee at the Citizens' Coalition for Economic Justice, remarked, "If the public takes on unsold homes, the market's price adjustment mechanism, which helps alleviate inventory, may not function properly. The government should consider reverse auction methods, where it buys at the lowest prices proposed by developers after determining the purchase volume."
* This article has been translated by AI.
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