Seoul, South Korea – South Korea is bracing for a housing supply shortage in the coming years, as a recent decline in housing starts is expected to lead to a significant drop in completed units.
A report by the Korea Construction Industry Research Institute (KCRI) revealed that while the government has implemented various measures to boost housing supply, the actual construction of new homes has been lagging behind. This is likely to result in a housing supply shortage, particularly in the Seoul metropolitan area, starting from 2025.
Declining Construction Starts
The number of housing starts in South Korea has been declining since 2022, falling below 300,000 units last year. Although the government has introduced regulatory reforms to stimulate the housing market, such as easing regulations on redevelopment projects, the construction of new homes has not kept pace with demand.
Impact on Housing Supply
The slowdown in construction is expected to lead to a decline in housing completions in the coming years. There is typically a lag of 2-3 years between when a housing unit is started and when it is completed.
As a result, the supply of apartments in the Seoul metropolitan area, which has seen a relatively stable supply in recent years, is expected to decrease starting next year. This is due to the decline in construction starts in 2022 and 2023.
Regional Disparities
The housing supply shortage is not limited to the Seoul metropolitan area. Regional areas are also facing a decline in housing supply, particularly in the non-apartment sector. The supply of non-apartments, such as single-family homes and townhouses, has been decreasing since 2020.
Outlook for the Future
The KCRI report warns that the housing supply shortage could exacerbate the existing housing affordability crisis in South Korea. The government is expected to take additional measures to boost housing supply and stabilize the housing market.
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