Value context and insight. lkm@koreatimes.co.kr
Real estate agent license loses luster amid market downturn
A man walks by a row of real estate offices in Songpa District, southern Seoul, April 13. Yonhap
By Lee Kyung-min
High borrowing costs and tight property lending regulations amid the deepening economic downturn in the post-pandemic years is creating a perfect storm for business closures among realtors.
“The property market is going down and so am I,” said a real estate agent surnamed Kim in Seoul.
“The only thing that keeps me from quitting is that I’m not the only one finding it hard to make ends meet in the years of market slump,” he said.
The frustration comes as the number of newly opened real estate offices plunged in March.
According to the Korea Association of Realestators, the figure stood at 924, falling below 1,000 for the first time since the government began compiling the data in 2015.
The spring season approaching is not helping, either, Kim said. “March through May usually brings a lot of homebuyers and renters, but I don’t see how anyone would risk having no business upon earning a new license."
“New realtors, I think, are taking tests to be licensed, expecting market rebound not in the near future, but in a couple of quarters," he added.
The association data showed that a total of 2,720 new agents opened businesses from January to March.
It was the first time the quarterly figure dipped below 3,000. Usually, the figure comes in at over 4,000 at the start of the new year.
This coincided with a steady decline in the number of overall realtors.
The figure came to 111,613 as of March, which marked 25 consecutive months of decline since February 2023.
The downtrend is explained by a drop in the number of people taking the realtor licensing exam. In 2023, a total of 154,669 took the test, an eight-year low. This was also the first time the figure fell below 200,000 since 2017.
In 2024, real estate transactions came to just barely over 1 million nationwide, a nearly 10 percent drop from a year earlier.
It was the lowest since the Ministry of Land, Infrastructure and Transport began disclosing its official data in 2006.
“High interest rates, tight lending regulations and economic slowdown have all led to a significant decline in overall market activity,” an association official said.
Also at play is an overall declining popularity of the rental market, a significant component of the property market demands.
“Realtors outnumber the property transactions in this building,” said a real estate agent based in Jamwon, southern Seoul.
“This means some are not closing a single deal this month, with no prospects for a meaningful uptick in transactions.”
Meanwhile, the number of newly built but unsold homes has topped 23,000 nationwide, hitting an 11-year-high.
According to the land ministry, the number of those homes came to 23,722 as of February. This is up 99.9 percent, or 11,855 units, compared to the previous year.
The figure is also a 6.1 percent increase, or 1,392 units, from a month earlier.
The newly built unsold homes are a major source of concern for small- to mid-size builders, particularly those with businesses in remote regions outside of Seoul.
Oftentimes, this is associated with a chain of bankruptcies, posing risks to the builders’ creditors — mostly banks.
Over 80 percent of these unsold homes are in areas far from Seoul and surrounding Incheon and Gyeonggi Province.
Daegu had 3,067 units, followed by North Gyeongsang Province (2,502), South Gyeongsang Province (2,459), South Jeolla Province (2,401), Busan (2,261), Jeju Island (1,658) and South Chungcheong Province (1,157).
The Korea Research Institute for Construction Policy called for an analysis of domestic and global conditions to help reinvigorate the stagnant construction sector.
The institute said a greater number of small-scale construction and renovation projects should be pursued while fostering small builders in metropolitan areas outside of Seoul.