Building permits and ground-breakings on the rise; Seoul sale price growth slowing

Supply conditions seen improving sharply from 2028 as third-generation new towns open

Apartment buildings in Seoul are seen from Namsan on Sunday. [Yonhap]
Apartment buildings in Seoul are seen from Namsan on Sunday. [Yonhap]

The government forecast medium- to long-term stabilization of the housing market, citing falling home prices in the three Gangnam districts — Seocho-gu, Gangnam-gu and Songpa-gu — and improving leading supply indicators.

The Ministry of Land, Infrastructure and Transport said Sunday that leading housing supply indicators have improved and some market cooling signals have emerged as a result of a series of policy measures, including last year's Sept. 7 housing supply expansion plan, this year's Aug. 13 rapid housing supply plan covering both private and public sectors, and last year's Oct. 15 housing market stabilization measures.

Building permits — a leading supply indicator — totaled 36,000 units in Seoul over the most recent six-month period from March through August, up 74 percent from the same period a year earlier and above the long-term average of 28,000 units recorded between 2016 and 2025. Ground-breakings in Seoul over the same period reached 17,000 units, below the long-term average of 31,000 but up 45 percent from 12,000 units in the year-earlier period.

On market trend indicators, sale prices in Gangnam-gu and Seocho-gu fell for 10 consecutive weeks, while the rate of increase in Seoul sale prices has slowed since July. Apartment transaction volumes in Seoul have declined since May, while the number of listings available for sale recently reached about 74,000, up 30 percent from roughly 57,000 at the start of this year.

Consumer sentiment also softened, with Seoul's housing purchase sentiment index declining since July amid price drops in key districts and rising interest rates.

The ministry said it must closely monitor market conditions in the near term, as upward pressures — including a decline in move-in volumes, rising household incomes, stronger purchasing power driven by a boom in industries such as semiconductors, and expectations of further price gains — coexist with downward pressures such as benchmark interest rate hikes and rising mortgage rates.

Over the medium to long term, however, the ministry projected that supply conditions would improve significantly from 2028, when move-ins at third-generation new towns begin in earnest, as the results of supply measures gradually become visible through increased permits and ground-breakings in both the public and private sectors.

The ministry also said a sharp slowdown in Seoul's household growth rate — from 2.20 percent in 2020 to 0.83 percent last year — and the possibility of an outright decline after 2038, combined with national balanced-development policies such as the five-pole, three-special-zone initiative and the second round of public institution relocations, would help disperse housing demand from Seoul and the Greater Seoul area to other regions, contributing to medium- to long-term stabilization.

The ministry said the decline in jeonse and monthly rent listings has been a trend since 2024 and is not limited to land transaction permit zones in Seoul and the metropolitan area, but is a nationwide phenomenon driven by a shortage of supply.

It added that the primary cause of the decline in jeonse and monthly rent listings is a sharp drop in move-in volumes that accelerated last year, particularly acting as a source of supply-demand instability in the metropolitan area, where the housing supply rate remains below 100 percent.

"We will continue to closely monitor market conditions, maximize stabilizing factors such as expanded supply, and minimize sources of instability, responding to market developments in a timely manner so that residential stability for the public can be achieved," the ministry said.


pink@heraldcorp.com