Seoul Apartments Face a Four-Year Cliff in Move-In Supply

It takes at least four years from construction start to apartment completion. Based on predictions drawn from Cheongyak Home data, virtually no new apartment move-in supply is expected in Seoul over the next four years.

This supply gap is a key factor that controls demand through price and ultimately drives apartment prices higher.

Mango Ssaem said, "If construction starts today, move-ins would come in the 2030s. For the next four years, there will be zero move-in supply. So prices could rise even more than they are now."

Over the past decade, the average number of people per household fell from 3.5 to 2.1. This is a phenomenon occurring as households split while the amount of space stays the same.

The same 1 million housing units can now accommodate far fewer people than before, so the decline in Seoul's population should be interpreted as a change in the capacity limits of housing.

Skepticism has been raised about the feasibility of the government's announced public rental housing supply plan, which exceeds 1.1 million units.

Except for the Roh Tae-woo administration, no past government has achieved even 50% of its supply plan.

Supply continuity that can be maintained even after a change of administration, rather than short-term policy announcements, is pointed to as the key to stabilizing the housing market.

Roughly 87% of Seoul's housing supply comes through redevelopment and reconstruction, and when buildings are demolished, existing residents are likely to move to nearby areas.

Especially where residents are older, there is a tendency to prefer staying in the local area, which could worsen the imbalance between supply and demand for local jeonse and monthly rent.

If the roughly 3,000 households of Jamsil Jugong 5-danji's members relocate, jeonse demand in nearby areas is expected to surge. Currently, the jeonse listings for mid-sized units in neighboring Jamsil Els and Richens number only about 400.

This relocation demand from reconstruction and redevelopment in Gangnam could spill over into the jeonse market in Gangbuk, pushing jeonse prices up, which is likely to lead to a seesaw effect driving sale prices higher.

Some analysts, however, say that jeonse prices may adjust when the new complexes are completed four to five years from now.

This involves calculating whether your own income can keep up with rising home prices, a perspective that treats real estate as a means of "earning money" through growing asset value.

Rather than focusing on unpredictable economic crises, you should first identify your available cash and loan size, check LTV and DSR via a loan calculator such as Naver's, and then shortlist candidate areas.

Apartment prices reflect the infrastructure of the neighborhood, so it is important to visit in person and judge whether the atmosphere suits you. Building a list centered on large complexes of 700 households or more can lower the chance of failure.

Choosing places with high trading volume secures sale stability, and it is sensible to shortlist livable areas first rather than relying on overly detailed return calculations before making a final decision.

Because the amount of the contribution relative to nearby market prices determines returns, you should first check the current floor area ratio on Naver and similar sites to gauge project feasibility. How large the contribution is relative to nearby market prices is an important factor determining returns.

It is advisable to first check what the floor area ratio of the current apartment is via Naver and similar sites to judge whether the project is viable.

Prices begin to rebound from this point, but [938] pointed out an "average trap": complexes that cannot be reconstructed keep falling, while those that can approach new-build prices. However, beyond the 22nd year, prices rebound due to reconstruction expectations.

This is the average trap: complexes that cannot be rebuilt show falling prices, while those that can be rebuilt form prices close to new apartments.

Reconstruction feasibility is determined by the size of the contribution. Revenue from general sales of the leftover land plays an important role in offsetting members' contributions.

As revenue from general sales increases, members' burdens fall sharply, so general sales profitability becomes the key indicator of reconstruction project success.

If the existing floor area ratio is high, securing project feasibility is difficult and the efficiency of reconstruction investment declines. Research shows that Seoul apartments with a floor area ratio above 210% tend to see weaker price momentum.

Especially for complexes dominated by small units, such as in Nowon-gu, whether the floor area ratio can be raised becomes the key factor in determining feasibility.

Nowon-gu established floor area ratio standards through its district unit plan about two years ago. Under this plan, areas near subway stations are more likely to see floor area ratio increases, which makes project feasibility favorable.

Notably, complexes such as Nowon Station Nearby Danji 3, 6, and 7 deserve attention, and areas near subway stations under construction, such as the Bank Intersection on the Dongbuk Line, also carry future value.

Mango Ssaem stressed, "When looking at complexes in Nowon-gu, you should focus on those near subway stations."

Local governments are concerned about the relocation demand from redevelopment projects and rising home prices, but people move according to the driving force of capitalism, which prioritizes their own interests.

Market logic that prices cannot be prevented from soaring without solving the supply shortage tends to outweigh political orientation.

Analysis of Seoul mayoral election vote shares showed high support in areas with redevelopment feasibility, regardless of political orientation. This shows that citizens have recognized the value of redevelopment and reconstruction, and that the existing negative sentiment has reached its limits.

Seoul's push for redevelopment and reconstruction is expected to become an important variable for stabilizing home prices over the next five to ten years.

Sale prices outside Seoul have exceeded 2 billion won, giving redevelopment projects momentum, but overheating should be guarded against, such as 600–700 million won being piled into early-stage redevelopment zones that have not yet been designated.

As in the cases of Sadang-dong and Sangdo-dong, even locations with good access can be eliminated from candidate sites due to structural issues, so you should not invest simply because you hear that an area is good.

The price gap between zones that are further along and those at the very early stage is not large, so an efficient choice is needed.

Mango Ssaem warned, "Recently, even places in Sadang-dong or Sangdo-dong that were said to have good prospects have been eliminated at the candidate-site designation stage. You should not jump in just because you hear that something is good."

The current real estate market is strongly shaped by institutional trends that limit owners to one or two homes, unlike in the past. Therefore, this is a period when a single failed investment can seriously damage your assets, requiring a cautious approach.

Rather than investments that rely on luck, the emphasis is on separating the good from the bad through feasibility analysis, and examining investment targets carefully is essential.