Housing Market Outlook Plummets Due to COVID-19... Lowest in 17 Months

Housing Industry Research Institute Announces HBSI Forecast at 51.0... Down 30.9 Points from Previous Month

[Asia Economy Reporter Onyu Lim] Due to the February 20 real estate measures and the spread of the novel coronavirus infection (COVID-19), the housing business outlook has fallen to its lowest level in 17 months.

According to the Korea Housing Industry Research Institute on the 6th, the nationwide Housing Business Survey Index (HBSI) outlook for March dropped sharply by 30.9 points from the previous month to 51.0. This is the lowest level in 17 months since November 2018, when it fell to 47.4 following the impact of the September 13, 2018 real estate measures.

The HBSI is an index that comprehensively assesses the housing business conditions from the supplier (construction company) perspective, based on a survey of about 500 member companies belonging to the Korea Housing Association and the Korea Housing Builders Association. If the outlook exceeds the baseline of 100, it means that more construction companies responded that the market will improve than those who responded otherwise; if it falls below 100, it indicates the opposite.

The Korea Housing Industry Research Institute analyzed, "With demand contraction inevitable due to the February 20 measures and the rapid nationwide spread of COVID-19 since the end of last month, the housing business market in March will become very difficult. Not only the sales stage, which requires direct face-to-face contact with consumers such as model house exhibitions and subscription consultations, but also the approval, groundbreaking, and completion (move-in) stages will inevitably be directly or indirectly affected."

By region, Seoul's outlook fell 2.3 points from the previous month to 68.2, breaking below the 70 mark and continuing its downward trend. In Busan (42.5), the expectation for housing business improvement sharply declined this month, with the outlook dropping by 54.0 points compared to the previous month. The Korea Housing Industry Research Institute explained, "This housing market index in Busan is the lowest outlook and the largest decline since the related survey began in 2014."

Daegu (54.7), where COVID-19 is rapidly spreading, also saw its outlook fall by 27.1 points from the previous month. Additionally, Daejeon (69.4), Gwangju (57.1), and Ulsan (66.6) all recorded outlooks in the 50s to 60s, decreasing by 10 to 20 points compared to the previous month.

Furthermore, the nationwide HBSI actual performance for last month (57.1) also dropped by 20.0 points from the previous month. Even Busan (56.4) and Ulsan (79.1), which had previously shown expectations for housing business improvement, saw significant declines.

The Korea Housing Industry Research Institute suggested, "The government needs to prepare measures to stabilize supply conditions such as manpower and material procurement at housing construction sites to prevent COVID-19 from causing delays or reductions in housing supply and to avoid future housing price instability."

This content was produced with the assistance of AI translation services.