Relationship Between Demand-supply in the Housing Market and Unsold New Housing Stocks

Abstract

The phenomenon of unsold new housing stocks is an important indicator in the housing market system; it is directly related to the profitability of the construction business and appears as a result of an imbalance in the demand and supply of houses. Changes in demand-supply because of various factors are another phenomenon that occurs in the housing market. It is considered that these changes in demand-supply are closely related to the unsold new housing stocks. Therefore, we analyze the relationship between demandsupply in the housing market and unsold new housing stocks using the vector error correction model. We used data from Seoul as the spatial scope of this study, and the temporal scope of time series data ranged from July 2001 to July 2009. To obtain the time series data, databases of the Ministry of Land, Transport and Marine Affairs, Statistics Korea, CERIK, and Kookmin Bank were utilized. The results of variance decomposition analyses indicated that for changes in unsold new housing stocks, the explanatory powers of housing selling price indexes and housing loans were high while the explanatory powers of production factors were relatively low. Based on the results of impulse response analyses, the quantity of unsold new housing stocks showed larger changes in response to the impulses of housing prices and housing loans than to the impulse of production factors. Also, it was indicated that, among the production factors, unsold new housing stocks showed a pattern of continued change in relation to the financing status of suppliers while showing impromptu responses to the impulses of the material or manpower situation but no continued change.

Capital Structure Determinants among Construction Companies in South Korea: A Quantile Regression Approach

“…In particular, because it is very sensitive to domestic and foreign market fluctuations (Kangari, 1988), the construction industry faced decreases in investments in equipment and construction, lowering real asset values, and a slump in the housing construction market. These consequently led to poor housing sales, decreased profitability, exhausted working capital, and financial liquidity crises (Jang et al, 2010). The liquidity crises did not end after the short-term effects of the crisis had been felt but led to company bankruptcies as well as the subsequent bankruptcies of their cooperative firms.…”

The Effect of Green Characteristics in Reducing the Inventory of Unsold Housing in New Residential Developments—A Case of Gyeonggi Province, in South Korea

“…Some of these resulted in oversupply; the most prominent example is the "Two Million Housing Unit Construction Plan" of the late 1980s. Following several unsuccessful large-scale housing developments and the national economic downturn during the last 30 years, a large number of housing units remained unsold [13]. For example, shortly after the domestic and global financial crises in 1997 and 2008, more than 120,000 and 160,000 unsold housing units accumulated in the nationwide housing market.…”

“…Jang and Lee, 2010 [13] With the government measures, the quantity of unsold housing units has been fluctuating. Kim, 2007 [6] Kang, 2018 [34] The high proportion of vacant units causes safety problems for the residents, has a negative impact on the nearby housing market, and forces the construction companies.…”

“…The reasons for the unexpectedly low sales rate have been posited to include inconvenient locations, unattractive physical characteristics of the housing, and unfavorable financial arrangements in the transaction process. More importantly, however, public amenities that were not ready at the time the housing opened for occupancy, such as transport links and school systems, constitute the main factor that discouraged prospective home-buyers [2,[13][14][15].…”

“…Although mounting numbers of studies have investigated the preferences of the green amenities reflected in the housing values in urban settings, equivalent studies on unsold housing units in suburban residential developments are limited [13]. While buyers of that particular type of housing are known to consider mainly the proximity to cities, transportation, and job locations when deciding where to live [32,33], their preference of green amenities has not been the subject of the analysis.…”