Buyers Priced Out of Apartments Turn to Larger Officetels

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1. With Home Prices Soaring, "Apartels" Rise Again

Key points: Surging apartment prices and lending restrictions are pushing mid- to large-sized officetels in prime locations in Seoul and the metropolitan area back into favor as alternative housing. A subscription offering this month for Mokdong Yunseul Xi drew 3,788 applications for 651 units, an average ratio of 5.8 to 1 and a high of 8.7 to 1, while a revised plan is under way to add 244 officetel units and 55 senior housing units on the former CBS site in Mokdong. Officetel sales nationwide reached 18,035 in the first half, up 8.2% from a year earlier, and transactions of units larger than 60 square meters jumped 21.4% from the second half of last year. With 5,666 units set to go on presale at eight sites nationwide in the fourth quarter, subscription results are seen as a turning point for the market's recovery.

2. 268 Trillion Won in Short-Term Debt Matures This Year, Raising Refinancing Risk

Key points: According to the Korea Securities Depository, short-term securities with less than 89 days to maturity stood at 268.34 trillion won as of the 22nd, accounting for 70.6% of total outstanding issuance of 380.334 trillion won. Commercial paper, short-term bonds and asset-backed commercial paper maturing this month alone total 181 trillion won, up 29.1% from 140 trillion won in September last year. The share of card bonds with maturities of two years or less issued by credit card firms soared to 52.4% at the end of June this year from 3.6% at the end of June last year, and card bonds maturing in the second half of this year total 15.1 trillion won, above the six-year average of 10.5 trillion won. With the European Central Bank, the U.S. Federal Reserve and the Bank of Japan raising rates in succession, rising funding costs are likely to spill over into property lending rates, analysts said.

3. Land Minister Hong Ji-sun: "We Will See Housing Supply Through to Groundbreaking and Move-In"

Key points: At an inauguration ceremony at the Sejong Government Complex on the 23rd, Hong Ji-sun, the new minister of land, infrastructure and transport, said housing supply "must not stop at plans and numbers" and pledged to oversee projects through the groundbreaking and move-in stages. Specific measures include running multilayered consultative bodies with local governments in the metropolitan area to build a fast-track permit process and establishing a "cooperative housing supply model." The minister cited expanding private long-term rentals as a tool to stabilize the rental market and promoting general-type public rental housing near subway stations as support for households that do not own a home. With faster supply and structural change in the rental market signaled, the impact on supply and demand by location should be tracked closely, analysts said.

4. With Home Sales and Supply Falling, August Moves Hit 53-Year Low

Key points: According to the Ministry of Data and Statistics' August domestic population movement figures, 471,000 people changed residence last month, the lowest for the month of August since August 1973. Home sales totaled 132,000 in June and July this year, down 4.4% from a year earlier, while apartment completions over the same period plunged 29.1% to 43,000 units. By region, net inflows were concentrated in Gyeonggi (4,486 people) and Incheon (2,270), while Seoul saw a net outflow of 2,901. Analysts described it as a structural trend in which a freeze in home transactions and shrinking supply are together weakening the very momentum behind population movement.

5. Chip Exports and Capital Spending Drive OECD to Raise Korea Growth Forecast by 2 Percentage Points in Six Months

Key points: The Organisation for Economic Co-operation and Development on the 23rd projected South Korea's economic growth at 3.7% this year, up 1.1 percentage points from its June forecast of 2.6% and 2 percentage points higher than the 1.7% it projected in March, six months earlier. Surging semiconductor exports driven by the spread of artificial intelligence and expanding capital investment were cited as the main factors. The OECD also raised its consumer inflation forecast for this year by 0.4 percentage point to 3.0%, signaling a phase in which growth and price increases occur together. If strong growth translates into upward pressure on interest rates, it could have mixed effects on property funding costs, analysts said.

6. [Exclusive] 150,000 Public Rental Homes Over 30 Years Old, but Only 4% of Remodeling Budget Spent

Key points: According to data submitted by Korea Land & Housing Corporation to Rep. Yoo Sang-bum of the National Assembly's Land, Infrastructure and Transport Committee, aging public rental homes at least 30 years old numbered 150,233 units as of the end of August this year, 12.6 times the 11,906 units in 2020. The remodeling budget for these complexes was cut to 125 billion won this year from 369.9 billion won in 2022, about one-third the earlier level, and of the 70.4 billion won allocated this year, only 2.7 billion won was actually spent, an execution rate of 4%. Aging complexes are concentrated in the metropolitan area, including 17 complexes in Seoul (25,057 units) and 19 in Gyeonggi (21,153 units), pointing to a phase of growing likelihood of policy change on public rental rebuilding and remodeling and of private rentals absorbing demand.