The South Korean government plans to purchase 5,000 unsold homes in local areas through the Korea Land and Housing Corporation (LH) by the end of the year. However, even if all applications from the fourth round, which is effectively the last call this year, are accepted, the total will only reach 65.7% of the target.
According to LH, 2,335 homes were applied for in the fourth round of additional purchases announced in August, and the review and field investigations are currently underway. Combining the approved homes from the third round (950 homes) with the fourth round applications results in a total of 3,285 homes, leaving a shortfall of 1,715 homes.
The actual purchase volume may be even lower. In the third round held in April, 6,953 homes were applied for, but only 13.7% passed the review. There is a possibility that some applications in the fourth round may also be rejected.
The largest number of applications in the fourth round came from Busan, with 616 homes, followed by Gyeongbuk with 373, Gyeongnam with 308, Jeonnam and Gwangju with 252, Ulsan with 241, Chungnam with 153, and Jeju with 134.
The burden of unsold homes in local areas remains significant. According to the Ministry of Land, Infrastructure and Transport, as of the end of August, there were 49,998 unsold homes in local areas, of which 23,711 were completed but unsold. A staggering 84.4% of the unsold homes nationwide are concentrated in local areas. Direct purchases by LH are a key part of the government's strategy to reduce this inventory and provide funding to developers.
LH cited the low approval rate as being due to the concentration of applications in areas with high vacancy rates and low housing demand. Since the purchased homes must be used for public rental, a lack of demand could lead to long-term vacancies. Homes that are unsold in the private market and then applied for public purchase are filtered out again due to the same lack of demand.
Price is also a variable. An LH official stated, "We determine the maximum purchase price based on an adjustment rate that considers the duration of unsold homes and the unsold rate for each complex, with prices set between 86% and 94% of the appraised value." If the expected price from developers does not align with the purchase conditions, it may be difficult to finalize contracts even if they pass the review.
There have also been cases where applicants did not meet the requirements. An LH official noted, "Currently, during the review process, the apartments must have conducted a recruitment announcement for residents and be unsold by the time of the purchase announcement, but some do not meet this requirement, making it difficult to proceed with the purchase."
The 950 homes that passed the third round of reviews are currently undergoing appraisals. Following negotiations and inspections, contracts are expected to begin in December. However, if price negotiations fail or developers withdraw from the sale, the final purchase figures may be lower than the number of homes that passed the review.
* This article has been translated by AI.
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