April Pre-sales Volume: 14,000 Units (-12,000 Units y-y)

The authors are analysts of NH Investment & Securities. They can be reached at minjae.lee@nhqv.com and ys.jung@nhqv.com, respectively. -- Ed.  

 

In April, nationwide pre-sales volume totaled 14,000 units, with a subscription ratio of 10:1. Although pre-sales volume declined m-m, unsold pre-sales volume remained similar m-m at 8 units. Nationwide, pre-sales volume for Korea’s top-10 constructors accounted for as much as 33% of the country’s housing supply.

April pre-sales volume: 14,000 units (-12,000 units y-y)

On a national basis, pre-sales volume in April totaled 14,000 units (-12,000 units y-y; -5,000 units m-m). By region, 4,800 pre-sales occurred in the Seoul metropolitan area, 3,600 in the 5 regional metropolitan cities and Sejong, and 5,700 in eight local provinces. Volume in the Seoul metropolitan area taking up 34% of the nationwide pre-sales total, breaking down as: 500 units in Seoul and 4,300 units in Gyeonggi. Of note, there were no pre-sales in Incheon, Gwangju, Ulsan, and Sejong.

Nationwide, 81% of the pre-sales volume was represented by non-housing association members, with the remaining 19% going to housing association members. In the Seoul metropolitan area, the portion for non-housing association members was 68%. This below-national average figure is attributable to the fact that constructor Booyoung pre-sold the 1,080 leased units of the Sarang Euro apartment complex in Jinjeop, Namyangju, out of which only 95 units were put up for pre-sales for non-housing association members.

Number of undersubscribed pre-sale sites stood at 8 in April

In April, the combined number of subscribers in the first and second eligible groups for pre-sales amounted to 78,000 (-81% y-y, -65% m-m), with a subscription ratio of 10.1, down significantly from last April’s 27:1. Projects with a subscription ratio of less than 1:1 among the first and second eligible groups for pre-sales numbered 8 nationwide, including 3 in Gyeonggi, 3 in Jeju, 1 in Daegu, and 1 in Jeolla. Although the number itself did not mark a significant m-m increase (10 in March), we note that the number of pre-sale events stood at 44 in March versus only 27 in April.

Out of the 8 undersubscribed projects, 4 were small-sized projects (less than 100 units), with a significant portion being located in Jeju (3). In addition, most of these undersubscribed sites were projects by small/mid-sized construction firms. Meanwhile, all of April pre-sale events by major construction firms proved successful. We note that domestic pre-sale market trends have been differentiating by site since January of this year.

Top-10 constructors represented as high as 33% of Korea’s housing supply

In April, pre-sales volume for Korea’s top-10 constructors came in at 5,000 units, accounting for 33% of the country’s housing supply. By region, the large constructors’ portion stood at 22% in the Seoul metropolitan area, 27% in Chungcheong province, and 77% in Gyeongsang province. 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 Eco Plant.

 

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