An Analysis of the Factors Driving Unsold Housing by Region

This study empirically analyzed the determinants of unsold housings with panel data across 16 regions in South Korea. Analysis factors had conventional ones including average prices of sold and stocked housings per unit, economically active population and lending rates and the consumer sentiment index and the price to income ratio. The results showed that the factors of the unsold housings were different from the regions and housing sales sentiment had an important role in decreasing unsold housings. In the Seoul metropolitan area, fluctuations in the sentiment were identified as the sole significant factor affecting the unsold inventory. In contrast, in the five major metropolitan cities, both the sentiment and changes in the economically active population exerted significant effects. In other regions, variations in the sentiment, the housing affordability index, the price ratio of new homes to existing ones and per capita regional gross domestic product were found to be significant determinants. The results underscored the necessity of region-specific policy interventions: stabilizing the housing market sentiment in the Seoul metropolitan area, fostering job creation to stimulate economic activities in the five major metropolitan cities and implementing measures to alleviate housing affordability constraints in other regions to address the issue of unsold housings.