Real Estate Market Reviving Amid the COVID-19 Era

Housing Business Survey Index and Sales Market Survey Index Forecasts Soar
Gangnam Housing Prices Turn Upward After 21 Weeks
However, High Volatility Expected Due to COVID-19 Pandemic

The appearance of apartments in the Gangnam area of Seoul on the afternoon of April 20. [Image source=Yonhap News]

[Asia Economy Reporter Onyu Lim] Signs are emerging that the real estate market, which plummeted due to the worsening of the novel coronavirus infection (COVID-19), is beginning to recover. Not only have the Housing Business Survey Index (HBSI) and the Pre-sale Market Survey Index (HSSI) outlooks risen significantly, but even the previously adjusting Seoul housing prices have shifted to an upward trend. However, since the COVID-19 pandemic continues, the possibility of the situation changing again cannot be ruled out.

◆June Housing Business Survey Index Outlook Rises 26 Points... "Not Good, But Improving"

According to the Korea Housing Industry Research Institute on the 14th, this month's HBSI outlook was 86.5, up 25.8 points from last month. The HBSI is an index that comprehensively assesses the housing business market from the supplier's perspective, surveyed among about 500 member companies of the Korea Housing Association and the Korea Housing Builders Association. If this outlook exceeds the baseline of 100, it means more construction companies responded that the market will improve than those who said it would not; if it falls below 100, it means the opposite.

Previously, due to the February 20 real estate regulation measures and the spread of COVID-19, the HBSI outlook recorded historic lows by falling 30.9 points and 8.9 points in March and April, respectively. However, last month's outlook rebounded by rising 18.6 points, and this month it increased sharply again.

By region, Seoul's HBSI outlook (106.2) rose 25.5 points from last month. Additionally, Daegu (91.1) and Ulsan (90.0) recovered to the 90-point level, while Gwangju (89.2), Daejeon (88.8), and Busan (81.8) recovered or maintained the 80-point level, showing a significant improvement in negative perceptions of business conditions.

Regional June Housing Sale Market Index Forecast Values

◆June Pre-sale Market Survey Index Outlook Rises 3 Points... "Activation of Marketing Tailored to the COVID-19 Era"

This month's HSSI outlook also rose 3.1 points from last month to 79.6. The HSSI is an index that comprehensively assesses the pre-sale conditions of apartment complexes that are about to be sold or are currently on sale from the supplier's perspective, surveyed monthly among housing business companies (members of the Korea Housing Association and the Korea Housing Builders Association). An HSSI above 100 indicates a positive sales outlook, while below 100 indicates the opposite.

The HSSI outlook recorded 81.5 in January but dropped to 69.8 in February as COVID-19 intensified and has remained in the 70s since then. However, a clear recovery trend is evident. The Korea Housing Industry Research Institute explained, "Overall, the level was maintained compared to the previous month, with increasing perceptions that sales conditions in the metropolitan area will improve. The introduction of measures such as cyber marketing, which allows sales projects to proceed within the COVID-19 quarantine system, and the upcoming implementation of the private land pre-sale price ceiling system have concentrated expectations."

By region, Seoul's HSSI outlook (109.5) rose 17.9 points from May, surpassing the baseline, and Incheon (91.1) and Gyeonggi (90.9) also showed favorable outlooks at the 90-point level. Metropolitan cities in provinces remain steady at 70?80 points, and other provinces at 50?70 points, but Jeju (50.0) fell 16.6 points, recording the lowest nationwide.

◆Seoul Apartment Prices Turn Up After 10 Weeks... Gangnam Rises After 21 Weeks

Along with the upward trend in various real estate indices, actual housing price changes are also reflected in figures. According to the 'Weekly Apartment Price Trends for the 2nd Week of June' released by the Korea Real Estate Board, Seoul apartment prices rose 0.02% compared to the previous week as of June 8. This marks the first upward shift in 10 weeks since March 30.

Seoul apartment prices began to decline from March 30, when the economic recession caused by COVID-19 started to take effect, showing a decline rate of -0.02% to -0.07%, but recently the decline has narrowed, showing signs of recovery. In particular, Gangnam District rose 0.02% this week, and Songpa District rose 0.05%. Both marked their first increases in 21 weeks since January 20.

The Korea Real Estate Board explained, "Due to the base rate cut and development prospects, urgent sale properties in the Gangnam area, which had seen large declines, have been exhausted, and buying demand has flowed in, leading Seoul housing prices to turn upward after 10 weeks of decline since the 5th week of March."

However, as the spread of COVID-19 continues, the recovery trend may be temporary. Kim Deok-rye, head of the Housing Policy Office at the Korea Housing Industry Research Institute, emphasized, "The concentration of expectations on the metropolitan market may be a temporary phenomenon before the implementation of regulations, and since uncertainty still exists due to COVID-19, it is necessary to prepare strategies to cope with this."

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