February Pre-sale Business Expectations 'Strong'

Housing Industry Research Institute February HSSI Forecast 88.7... Up 10 Points from January
Seoul and Gyeonggi Up 13 and 17 Points Respectively
However, COVID-19 Remains a Variable

February 2020 HSSI Outlook: Nationwide 88.7 (Graphic by Housing Industry Research Institute)

[Asia Economy Reporter Onyu Lim] Expectations for nationwide pre-sale projects in February have significantly increased. The Housing Subscription System transfer has been completed, and with the imminent implementation of the private land price ceiling system, the Housing Sale Sentiment Index (HSSI) surged sharply. However, the spread of the novel coronavirus remains a potential variable.

According to the Korea Research Institute for Human Settlements on the 11th, the nationwide HSSI forecast for February was 88.7, up 10.1 points from the previous month. The forecasts for the Seoul metropolitan area and other metropolitan cities recorded between 90 and 100, and other regions also showed improved perceptions of the pre-sale market, ranging from 70 to 100. The HSSI is an index that comprehensively assesses the pre-sale conditions of complexes that are about to be sold or are currently on sale from the supplier's perspective. It is surveyed monthly targeting companies engaged in housing projects (members of the Korea Housing Association and the Korea Housing Builders Association).

By region, especially Seoul (92.1, up 13.2 points), Gyeonggi (100, up 17.3 points), and Incheon (95, up 17 points) saw their forecasts rise by 10 to 20 points compared to the previous month. The forecasts for metropolitan cities such as Busan, Gwangju, Daegu, and Daejeon also generally increased. The Korea Research Institute for Human Settlements analyzed, "With the completion of the housing subscription system transfer, scheduled pre-sale schedules can be processed from mid-February," and "It is judged that expectations for the pre-sale market during the grace period before the introduction of the price ceiling system are also reflected." Earlier, on the 3rd, the Korea Real Estate Board took over the subscription system from the Korea Financial Telecommunications & Clearings Institute and launched the 'Subscription Home' service.

However, the Korea Research Institute for Human Settlements added, "Since recent forecasts for the pre-sale market have repeatedly surged and plunged, increasing market volatility, and the impact of the coronavirus cannot be excluded, continuous monitoring and preparation of response strategies are necessary."

The HSSI forecast for pre-sale prices in February was 101, down 1.1 points from 102.1 in the previous month. The institute advised, "With recent additional regulations announced and the government's regulatory policy stance continuing, market volatility is intensifying," and "It is necessary to hedge pre-sale risks by thoroughly reviewing the timing of pre-sales, pre-sale prices, and market demand before establishing pre-sale plans."

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