Real Estate Market Recovery Hopes Falter as Brokerage Firms Continue to Close

the brokerage industry continues to face significant challenges

Despite recent signs of recovery in the real estate market, the brokerage industry continues to face significant challenges. In June 2023, the number of newly established real estate brokerage offices was 744, the lowest since 2015. Meanwhile, the number of closed or suspended offices reached 1,137. This article delves into the current state of the real estate brokerage industry and explores the reasons behind these difficulties.

Although there has been an increase in apartment transactions, particularly in the metropolitan area, the real estate brokerage industry remains in a slump. According to data from the Korea Association of Realtors, the number of newly established real estate brokerage offices nationwide in June totaled 744, a 16.3% decrease from the previous month. This is the lowest monthly figure since the association began collecting data in 2015. Compared to the same month last year, the number of new openings has dropped by 23.1%.

On the other hand, the number of brokerage offices that closed or suspended operations last month was 1,137. Although this is a slight decrease from the previous month, it still significantly surpasses the number of new openings. The trend of closures and suspensions exceeding new openings has continued since August 2022.

In the first half of this year, the number of closed or suspended brokerage offices was 7,508, significantly higher than the 5,586 new openings. As a result, the total number of operating real estate brokers nationwide at the end of June was 113,675, a decrease of 3,479 from a year ago. This is the lowest figure since March 2021.

In Seoul, the number of closed or suspended brokerage offices last month was 254, down from the previous month, but the number of new openings was only 194, indicating that closures still outnumber openings. The total number of operating real estate brokers in Seoul at the end of June was 25,891, about 1,000 fewer than last year.

An association representative explained, "The recent recovery in transactions is limited to the apartment market in some areas of Seoul and the metropolitan area, while most other areas and the non-apartment market still see low transaction volumes. The prolonged transaction slump due to high interest rates has led to increased labor and rental costs, forcing many brokers to close or suspend operations."

Despite signs of recovery in some segments of the real estate market, the brokerage industry continues to struggle. The high interest rates and prolonged transaction slump have caused many brokerage offices to close. For the real estate market and the brokerage industry to stabilize, broader market activation and policy support are necessary. It is hoped that these measures will help bring about a more comprehensive recovery and stability in the industry.