Top-10 Builders Represent 47% of Korea’s Housing Supply

The author is an analyst of NH Investment & Securities. He can be reached at minjae.lee@nhqv.com. -- Ed.  

 

December figures show the highest monthly national pre-sales volume for last year. Except for Daegu and Gyeongbuk, subscription ratios proved sound.

Monthly-high pre-sale volume reached in December

In December, nationwide apartment pre-sale volume reached 46,000 units, the highest monthly result for 2021. By region, 16,000 units were sold in Seoul and its neighboring areas, 12,000 units in five regional metropolitan cities and Sejong, and 18,000 units in eight provinces. By region, the largest volume was pre-sold in Gyeongsang region, with three metropolitan cities (Busan, Daegu, and Ulsan) representing more than a half (10,000 units). December pre-sale volume clocked at around 5,000 units in the Jolla region, 6,000 units in the Chungchung region, and 1,000 units in both the Gangwon and Jeju regions. 

Nationwide, 81% of the pre-sale volume was sold to non-association members, with the remainder (19%) going to house association members. That said, the member portion was high at 33% in Gyeonggi province and 40% in Busan, as reconstruction/redevelopment projects took up a high portion. In Daegu, where the member portion was low at 15%, there existed a higher probability of occurrence of unsold apartments compared to other metropolitan cities.

Subscription ratios sound (except for Youngnam region)

While the first and second eligible groups for pre-sales for December recorded 253,000 (-34% m-m), the average subscription ratio for all eligible groups came in sound at 10:1. By region, the first and second eligible groups for pre-sales stood at 122,000 in the Seoul metropolitan area, 14,000 in five regional metropolitan cities and Sejong city, and 117,000 in eight provinces. In Jeonbuk and Gyeongbuk provinces, the figure reached 35,000, respectively, the highest monthly level seen in 2021. But, on a general provision basis (including special provision), 19 areas—13 in Youngnam, 2 in Honam, 3 in Chungcheong, and 1 in metropolitan region—showed a subscription ratio of less than 1:1.

The number of housing projects with a subscription ratio of less than 1:1 in Daegu and Gyeongbuk stood at six and five, respectively, including Prugio Bricent (794 units; subscription ratio of 0.53:1), Lottel Castle Central Sky (481 units; 0.25:1), Youngdae Hospital Station Gold Class Central (660 units; 0.07:1), and New Gyeongju Bando Ubora Ivy Park B4 & B5 blocks (1,490 units; 0.25:1)

Top-10 constructors represent 47% of Korea’s housing supply

In Dec 2021, top-10 constructors’ pre-sales reached 21,000 units, the highest monthly point for the year. But, they represented 47% of Korea’s housing supply, with others taking up the remaining 53%. The large builders’ housing supply portions were in the late 40% range across the country, including the Seoul metropolitan area, five regional metropolitan cities, and eight regional provinces. Of note, top-10 domestic constructors are Hyundai E&C, Hyundai Engineering, Samsung C&T, GS E&C, Daewoo E&C, DL E&C, HDC Hyundai Development Company, POSCO E&C, Lotte E&C, and SK Ecoplant.

 

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