Korea Points to Improving Housing Indicators and Stronger Supply From 2028
The government says rising approvals and housing starts, cooling prices in parts of Seoul and future occupancy in third-generation new towns could improve the capital region’s housing balance, while warning that near-term risks remain.
South Korea’s government said improving construction indicators and signs of cooling in parts of Seoul support a more stable medium-term housing outlook, although it acknowledged that tight near-term supply and competing market pressures still require close monitoring.
The Ministry of Land, Infrastructure and Transport said housing approvals in Seoul totaled 36,000 units during the six months from March through August. That was 74 percent higher than in the same period a year earlier and above the 2016-2025 average of 28,000 units for the comparable period.
Housing starts in Seoul reached 17,000 units over the same six months. The total remained below the longer-term average of 31,000, but was 45 percent higher than a year earlier. Approvals and starts are watched as leading indicators because they precede completion and occupancy, meaning their impact on the number of homes available to residents takes time to emerge.
The ministry also highlighted softer market conditions in parts of the capital. Apartment sale prices in Gangnam and Seocho districts have declined for 10 consecutive weeks, while the pace of price gains across Seoul has slowed since July. Transaction volume has generally fallen since May, and the number of homes listed for sale recently reached about 74,000, up 30 percent from the beginning of the year.
The government said Seoul’s housing-market consumer sentiment index has also been declining since July. It attributed the shift to price weakness in key districts and higher interest rates, describing the change as evidence that previously overheated sentiment is easing.
Officials nevertheless identified forces that could keep prices elevated in the short term. These include fewer newly completed homes, rising household income, stronger purchasing power linked to the semiconductor boom and expectations of further price increases. Higher benchmark and mortgage lending rates could push in the opposite direction by making borrowing more expensive.
The ministry expects supply conditions to improve more clearly from 2028, when occupancy is projected to accelerate in the third-generation new towns being developed around the capital. It said recent gains in public- and private-sector approvals and starts should gradually translate into additional supply.
Longer-term demographic and regional policies could also affect demand. Seoul’s household growth rate slowed from 2.20 percent in 2020 to 0.83 percent last year, and the government said the number of households could begin declining after 2038. It also expects regional development and the planned relocation of more public institutions to disperse some housing demand away from Seoul and the wider capital area.
On the rental market, the ministry said declining listings have been evident nationwide since 2024 rather than being limited to land transaction permit zones. It linked the shortage mainly to a sharp fall in newly completed housing, particularly in the capital region, where the housing supply ratio remains below 100 percent. The government said it would continue monitoring market conditions and respond to supply and demand risks as they develop.