Pre-sales Breakdown Shows Healthy Regional Distribution
The author is an analyst of NH Investment & Securities. He can be reached at minjae.lee@nhqv.com. -- Ed.
In January, which is a low season for the domestic construction industry, nationwide apartment pre-sales reached 17,000 units (+10% y-y), with a subscription ratio of 9.7:1. Sales focused on relatively strong demand areas (Seoul and neighboring areas and the Chungcheong region), and subscription ratios were sound despite concerns.
January pre-sales volume reaches 17,000 units (+1,000 units y-y)
Pre-sales volume in January amounted to 17,000 units (+1,000 units y-y). By region, 10,000 pre-sales were made in Seoul and neighboring areas, 1,000 units in five regional metropolitan cities and Sejong, and 6,000 units in eight provinces. In particular, the largest number of units was recorded in Seoul and neighboring metropolitan areas, breaking down as 1,000 units in Seoul, 1,000 units in Incheon, and 8,000 units in Gyeonggi. For reference, 2,000 pre-sales were made in Gyeongsang, 1,000 units in Jeolla, and 4,000 units in Chungcheong. Gangwon and Jeju had no pre-sales.
Nationwide, 88% of the pre-sales volume was sold to non-house association members, with remaining 12% going to house association members. However, in Seoul and Gyeonggi province, the member portions were high at 69% and 16%, respectively. In other regions, the member portion was 0%, which indicates a high probability of unsold units.
Pre-sales breakdown shows healthy regional distribution
In January, the combined number of people in the first and second eligible groups for pre-sales amounted to 85,000 (-40% y-y), but the average subscription rate for all eligible groups came in sound at 9.7:1. By region, the number of people in the first and second eligible groups for pre-sales stood at 47,000 in Seoul and neighboring areas, 2,000 in five regional metropolitan cities and Sejong, and 36,000 in eight provinces. There was only one site in Daegu where the subscription rate was less than 1:1. We determine that that average subscription rate was high as pre-sales volume was mainly digested in Seoul and neighboring areas and Chungcheong, where market conditions are relatively sound. For reference, combined pre-sales volume in the Seoul metropolitan area and Chungcheong amounted to 14,000 units, accounting for 83% of the total.
Top 10 constructors represent 57% of housing supply
In January, pre-sales volume for Korea’s top 10 constructors stood at 9,000 units (or 57% of domestic housing supply), with others making up the remaining 43%. Of note, in Seoul and surrounding areas, which recorded the highest pre-sales volume, the top 10 constructors’ portion of supply came to 82%. For reference, the 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