Seoul Housing Supply Shortage Deepens... A 'No-Answer Market' Unable to Keep Up with the Speed of Household Fragmentation

The supply and demand imbalance in the Seoul real estate market is intensifying. An analysis has emerged stating that excess demand is accumulating in Seoul as the speed of household fragmentation outpaces the volume of housing supply. According to a video from the YouTube channel 'Finance with Toad Tax Accountant', the speed of household fragmentation in Seoul is faster than the rate at which the total amount of housing, including all apartments and general houses in Seoul, is increasing, creating a structure where demand continuously accumulates.

Seoul Supply Cannot Keep Up with Household Fragmentation... Excess Demand of 100,000 Units Occurs

The video explained the housing supply shortage in Seoul using household fragmentation data. Over the past 8 years, 370,000 households were fragmented in Seoul, but during the same period, the housing supply was limited to 270,000 units. As a result, an excess demand of approximately 100,000 units has accumulated. The video analyzed that because the speed of household fragmentation in Seoul is faster than the speed at which the housing volume increases, it is a "no-answer market" when looking only at supply at the current point or when considering household fragmentation as the cumulative part of demand.

In particular, the future market was forecasted through changes in move-in volumes in the Seoul Capital Area. During the three years of the Moon Jae-in administration, approximately 620,000 apartments moved into the Seoul Capital Area, recording an all-time high supply volume, but it was revealed that the move-in volume would plummet to a level of approximately 350,000 units during the three years of the Lee Jae Myung administration (based on the timing within the video). The video explained the impact of volume changes on prices by stating that while prices are adjusted when volume is high, one can think in reverse when volume is low, using the expression, "There is no merchant in front of volume, and no merchant behind volume."

Gyeonggi Province Core Areas Rising... Incheon Stagnant Due to Lack of 'Connection' with Seoul

The market atmosphere varied by region. In the case of Seoul, the upward trend has already spread to non-apartment sectors, and in Gyeonggi Province, the upward trend is spreading centered around core areas adjacent to the outskirts of Seoul. From January to August this year, house prices in Gyeonggi Province rose by about 7%, led by Seongnam (including Daejang areas), Yongin, Suwon, Anyang, Uiwang, and Hanam (including Wirye). However, Gwacheon showed a relatively sluggish appearance due to the aftermath of last year's surge. On the other hand, Yangpyeong, Goyang, and Uijeongbu are maintaining a quiet flow.

Conversely, the Incheon area is showing a pattern where the upward trend of Gyeonggi Province is not being fully transmitted. The overall house price in Incheon rose by only 1% this year, and the Songdo area also remained at a 2% increase. The video analyzed that no matter how hot it gets in Seoul, the warmth cannot jump over to Incheon and feels like it is being cut off at Songdo. In particular, it was explained that a phenomenon where the market trend is interrupted is appearing in Bupyeong, Gaehang, Samsan New Town, Eomdan, and Gimpo. However, accessibility centered around new apartment complexes in Incheon, such as Cheongna or Lu1 City, was mentioned.

During Interest Rate Hike Periods, the Selling Trend of 'Middle-Class Single-Homeowners' is a Market Variable

The 'whether or not single-homeowners sell' was chosen as a key variable determining real estate downturns. Analyzing past downturn cases during the IMF financial crisis or the Global Financial Crisis, it was explained that downturns occur when single-homeowners, rather than multi-homeowners, sell. This is because in situations where unemployment increases, companies go bankrupt, and liquidity is blocked, people must sell housing, which is an essential good, for survival. In particular, mentioning cases where single-homeowners sold during past periods of skyrocketing interest rates, it was pointed out that the main sellers at that time were mainly the middle class and the working class.

Differences in impact by class during interest rate hike periods were also mentioned. From the perspective of the cash-rich, there is a view that interest rate hikes actually increase interest income and thus increase assets, but it was pointed out that working-class people who rely on salary income are vulnerable to the increase in the interest burden. The video explained that the main subjects of selling by single-homeowners during interest rate hike periods are mainly the middle class and the working class.

Meanwhile, the movement in areas near the semiconductor cluster also drew attention. In the case of Hwaseong, it showed a surging trend, rising by about 12% this year, and the area leading this is Dongtan. In relation to recent discussions regarding Samsung Electronics' internal loans (1.5% interest rate, up to 500 million won), it was mentioned that including internal loans, an individual's fund mobilization capability could increase to the level of 1 billion to 1.5 billion won.