March Seoul Housing Supply Also Affected by 'Corona Infection'

Seoul Housing Sales Sentiment Index (HSSI) Forecast Hits All-Time Low

[Image source=Yonhap News]

[Asia Economy Reporter Onyu Lim] The novel coronavirus infection (COVID-19) struck the Seoul housing market in March, the peak season for spring sales. Model home openings were canceled, and schedules for union general meetings were disrupted, causing the Seoul Housing Sales Sentiment Index (HSSI) forecast to hit an all-time low. Some redevelopment and reconstruction unions plunged into significant confusion, requesting a postponement of the private land price ceiling system implementation scheduled for the end of next month.

According to the Korea Housing Industry Research Institute on the 12th, the Seoul HSSI forecast for this month was 69.6, plunging 22.5 points compared to the previous month. This is the first time the Seoul HSSI forecast has recorded a level in the 60s since the survey began. The nationwide HSSI forecast also dropped 22.0 points from the previous month to 66.7. Except for Ulsan (80.9), the HSSI forecasts for other regions fell to the 50-70 range.

HSSI is an index that comprehensively assesses the sales conditions of apartment complexes that are about to be sold or currently on sale from the supplier's perspective. It is surveyed monthly among members of the Korea Housing Association and the Korea Housing Construction Association engaged in housing projects. An HSSI above 100 indicates a positive sales outlook, while below 100 indicates a negative outlook.

The biggest factor behind the sharp drop in Seoul's HSSI forecast is attributed to COVID-19. Additionally, the negative sentiment was further fueled by strengthened regulations, such as the reduction of the basic construction cost, which serves as the standard for calculating sale prices. The Korea Housing Industry Research Institute explained, "Although the transfer of the subscription system was completed and an increase in March sales volume was expected, housing construction companies postponed or canceled model home openings due to COVID-19, causing disruptions in sales schedules."

In particular, March is analyzed to be more severely impacted because many complexes planned to sell or prepare for sales to avoid the private land price ceiling system.

In fact, a total of about 32,400 households across 15 complexes are scheduled to be sold in March and April in Seoul areas subject to the price ceiling system, including Dunchon Jugong in Gangdong-gu, Gaepo Jugong 1 Complex in Gangnam-gu, Sinbanpo 13th in Seocho-gu, Heukseok 3 District in Dongjak-gu, and Susaek 6 and 7 Districts in Eunpyeong-gu. To avoid the price ceiling system, they must announce the recruitment of residents by the 28th of next month. If the management disposition plan has been changed, a union general meeting must be held.

However, unions cannot arbitrarily change schedules. For example, Gaepo Jugong 1 Complex, which is in a hurry, decided to take the risk and hold a union general meeting at Gaepo Middle School playground on the 30th, reluctantly accepting the situation.

Some redevelopment and reconstruction unions have requested a postponement of the private land price ceiling system implementation. The Future City Citizens' Coalition, a coalition of reconstruction and redevelopment unions, officially petitioned the Ministry of Land, Infrastructure and Transport on the 11th to amend the related law (enforcement decree) to postpone the implementation of the price ceiling system by at least three months as a measure to block and overcome the spread of COVID-19. Local governments such as Gangnam-gu, Eunpyeong-gu, and Dongjak-gu also requested the Ministry of Land to delay the price ceiling system.

A Ministry of Land official said, "The spread of COVID-19 may affect whether the implementation is postponed," adding, "We are currently checking the schedules of union general meetings."

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