COVID-19 Crisis... March Seoul Housing Market Outlook Hits 'Worst Ever'

First 60 Mark Recorded in Seoul Amid Nationwide Forecast Decline
"Increased Volatility in the Housing Market and Amplified Uncertainty Due to COVID-19"

[Asia Economy Reporter Onyu Lim] The spread of the novel coronavirus infection (hereinafter COVID-19) is expected to significantly worsen nationwide pre-sale conditions in March. In particular, Seoul is predicted to record the lowest level since the Housing Sales Sentiment Index (HSSI) survey began.

According to the Korea Research Institute for Human Settlements (KRHIS) on the 11th, the nationwide HSSI forecast for March is 66.7. Despite being ahead of the peak pre-sale season, it dropped by 22.0 points compared to the previous month. The HSSI is an indicator used by suppliers to assess pre-sale conditions and is surveyed monthly among housing developers.

The core reason for the deterioration in the March HSSI forecast is the worsening pre-sale conditions caused by COVID-19. KRHIS analyzed, "Due to COVID-19, housing construction companies have postponed or canceled model house openings, causing disruptions in pre-sale schedules. Additionally, regulations have been strengthened, such as the reduction of the basic construction cost, which serves as the standard for calculating pre-sale prices, leading to a significant increase in negative perceptions."

Looking at the regions, except for Ulsan (80.9), the HSSI forecasts for other areas fell to the 50-70 range. Especially in Seoul, it plummeted by 22.5 points from the previous month to 69.6. This is the first time Seoul's HSSI forecast has recorded a level in the 60s since the survey began. Some complexes in Seoul must issue resident recruitment announcements before the end of April to avoid the pre-sale price ceiling system, but they are unable to carry out scheduled events such as union general meetings and model house openings as planned.

The forecasts for metropolitan cities and other provinces also show a sharp decline. With the pre-sale market outlook repeatedly experiencing sharp rises and falls, volatility is increasing, and the overlapping impact of COVID-19 is expected to amplify uncertainty. KRHIS stated, "It is necessary to prepare business strategies such as response plans for projects that established pre-sale plans before the expiration of the pre-sale price ceiling system grace period and management plans after COVID-19 subsides."

The adverse effects of COVID-19 on the pre-sale market have already begun. The February HSSI actual figure was surveyed at 60.8, showing a sharp drop. This figure fell by 22.4 points compared to the previous month, marking the 60s level for the first time in six months. Seoul maintained pre-sale performance in the 80s, but other regions saw declines of 10 to 30 points.

KRHIS said, "Although negative perceptions about the pre-sale market are spreading, bidding frenzy will continue in some competitive complexes with advantageous locations and prices," adding, "The polarization and localization of the pre-sale market are expected to intensify further."

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