Warning of an Incoming Occupancy Cliff Due to Conservative Pre-sale Strategies
‘Loan Regulations’ the Biggest Obstacle to Expanding Pre-sales
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| Only 12.5% of construction company CEOs planned to expand pre-sales this year. The photo shows a construction site in Seoul. [Herald DB] |
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, ‘The government is working to stabilize the housing market through increased supply, but most CEOs in the construction industry have expressed intentions to take a conservative approach in the housing sector this year. Factors such as loan and transaction regulations, local elections, and regional polarization were cited as variables that are causing hesitancy in expanding housing supply. In particular, many expressed concerns that the pre-sale market, a barometer of actual supply impact, will be more heavily contracted due to loan regulations.’,
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, ‘▶Housing Pre-sale Plans, 68.8% to ‘Observe or Maintain’…18.8% to Reduce=In a survey conducted by Herald Economics with 16 domestic construction industry CEOs for the New Year 2026, only 12.5% (2 companies) responded that they plan to increase pre-sales this year.’,
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, ‘43.8% (7 companies) said they would “respond flexibly as they observe the situation,” and 25% (4 companies) said they would maintain the same level as the previous year. The percentage of those planning to reduce pre-sales was 18.8% (3 companies).’,
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, ‘The CEOs unanimously stated that “strategies appropriate to government policy uncertainties are necessary,” and emphasized the need to consider various variables such as regional polarization, local elections, and supply policies. One CEO said, “There is no guarantee that the pre-sale market will recover over time,” and emphasized a focus on “pricing according to current market values and preventing risk expansion.”’,
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, ‘The background for choosing ‘maintaining last year’s level’ includes: ▷ building a portfolio centered on pre-sale viability in Seoul and the metropolitan area ▷ strategies considering the unpredictability of the housing market ▷ decoupling phenomena due to differences in pre-sale viability by region. The explanation provided is that they will engage in ‘selection and concentration’ focusing on regions with high business potential due to increasing regional polarization.’,
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, ‘Those who responded they would reduce pre-sales cited plans to diversify their business portfolios by ▷ strengthening the housing operation business ▷ focusing on officetels ▷ concentrating on public, environmental, and mixed development projects.’,
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, ‘With construction industry CEOs adopting conservative pre-sale strategies this year as well as last year, there is a forecast of an occupancy cliff with a 1-2 year lag. According to data compiled by Real Estate R114 surveying major domestic construction companies, a total of 187,525 private apartments are expected to be pre-sold this year. This is an increase of 6,000 units compared to 2025, but more than 10,000 units less than the recent 3-year average of 198,000 units.’,
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, ‘▶75% of CEOs Cite Loan and Transaction Regulations as Obstacles…“Need to Establish a Stable Funding Environment”=In response to the question about ‘the biggest difficulty in the pre-sale process,’ 62.5% (10 companies) indicated ‘loan regulations’. Under the government’s October 15th real estate measures, the entire area of Seoul and 12 regions in Gyeonggi were designated as regulated areas and land transaction permit zones, and mortgage loan limits were significantly reduced. Accordingly, different loan limits of ₩600 million for units under ₩1.5 billion, ₩400 million for units over ₩1.5 billion and under ₩2.5 billion, and ₩200 million for units over ₩2.5 billion are applied. Strong loan regulations have reduced the incentive for consumers to participate in the pre-sale market.’,
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, ‘12.5% (2 companies) also cited ‘transaction regulations in land permit zones’ as causing the pre-sale market contraction, contributing to a total of 75% acknowledging that government policies like loan and transaction regulations are pulling down the pre-sale market. One CEO stated, “To revitalize the private market, a stable financial procurement environment must be provided.”’,
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, ‘12.5% (2 companies) also identified ‘project financing (PF) constraints’ as a financial hurdle. Factors such as high exchange rates, economic downturn, and real estate polarization have worsened funding conditions, with the government’s PF prudential regulation improvement plan also being a variable.’,
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, ‘The government plans to implement measures from 2027 that will differentiate risk weights and provisions based on the self-capital ratio compared to PF project costs and restrict loans. NICE Rating evaluated that “the reinforced prudential regulations may reduce the scale of new PF handling in the short term, exerting downward pressure on the real estate supply market.”’,
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, ‘Additionally, the percentage citing ‘local government permission delays’ and ‘provincial real estate stagnation’ was 6.3% (1 company) each. One CEO noted, “To substantially increase supply, the government needs to complement systems from various angles in terms of permits, finance, and profitability.” Another CEO emphasized, “There is a need for policies that utilize market adjustment functions rather than regulation-centered policies.” By Jeong Eun-seo, Reporter’,
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