A 'supply cliff' to the frozen real estate market...Concerns over market instability

[Anchor]
Private apartment sales are expected to hit the lowest level ever this year amid the slump in the real estate market.

Concerns are growing as the aftermath of the supply cliff continues, with the housing supply rate in Seoul also falling for the fourth consecutive year.

Reporter Kim Tae-min's report.

[Reporter]
The real estate recession, which began in the second half of last year, is getting worse in the new year.

In the frozen market atmosphere, construction companies are hesitant to supply new ones.

This year, the number of apartments planned by 25 private construction companies in Korea is less than 150,000 households nationwide, the lowest level since statistics were compiled.

Surging construction costs are also a major contributor to the supply shortage.

The construction cost index, compiled in November last year, showed a whopping 29% increase from four years ago.

In the aftermath of the shortage of supply, the number of houses in Seoul is only 93% of the total number of households, and the housing supply rate has been on the decline for four years.

The problem is that this could cause more instability in the market in two or three years.

[Ham Young-jin / Head of Woori Bank Real Estate Research Lab: The recent start of licensing was less than usual, so it could eventually cause a shortage of housing supply in two or three years. // It can act as a factor of rising housing prices or instability in jeonse and monthly rent prices.]

In the first half of this year, there is also an expectation that loans will be breathed out as the possibility of lowering the Bank of Korea's base rate and commercial banks' additional interest rates increases.

However, most of them say that this is not enough to inspire the real estate market.

[Park Won-gap, senior real estate expert at KB Kookmin Bank: Even if some lending thresholds are lowered, it is unlikely that (real estate) transactions will increase significantly due to political uncertainty and financial market instability]

With both demand and supply for home sales halted, the government will need to steadily signal consistent policies from now on to prevent greater market instability.

I'm Kim Tae Min of YTN.