COVID-19 slowdown leads to nationwide housing market recovery... "Too early to be optimistic"

Housing Industry Research Institute Announces June Nationwide Housing Market Real Sentiment Index (HOSI) Forecast at 77.6
Up 11.4 Points from Previous Month

[Asia Economy Reporter Lim On-yu] As the spread of the novel coronavirus infection (COVID-19) slows down, the nationwide housing move-in market is gradually recovering, centered on the metropolitan area and major cities. However, due to the significant uncertainty caused by COVID-19, some analysts say it is still too early to be optimistic.

The Korea Housing Industry Research Institute announced on the 16th that the nationwide Housing Occupancy Sentiment Index (HOSI) forecast for June rose by 11.4 points (p) from the previous month to 77.6. HOSI is an indicator that comprehensively assesses the move-in conditions of apartment complexes that are about to be occupied or are currently being occupied from the supplier's perspective. A value above the baseline of 100 indicates favorable conditions, while below 100 indicates unfavorable conditions.

As the risk of COVID-19 spread decreases and move-in schedules resume, the forecast index is rising mainly in the metropolitan area and major cities.

Seoul (110.0) was the only region to record above 110. This is the first time in six months since December last year that Seoul has exceeded the baseline of 100. Gyeongbuk (94.7), Daejeon (90.4), and Gyeonggi (90.0) showed values in the 90s, while Sejong (87.5), Gyeongnam (85.7), Incheon (84.8), Daegu (82.6), and Gwangju (80.9) recorded values in the 80s. However, Gangwon (57.1) was in the 50s, and Jeju (44.4) was in the 40s.

Last month’s nationwide HOSI actual value also rose by 10.1p from the previous month to 72.8. In particular, Daejeon (100.0, 31.6p↑), Sejong (81.2, 24.1p↑), Busan (74.0, 24.0p↑), Gyeonggi (82.9, 23.3p↑), Gangwon (76.9, 22.4p↑), and Seoul (97.2, 20.5p↑) saw increases of more than 20 points compared to the previous month.

However, it still remains below 100, and move-in conditions worsened further in Chungbuk (45.4, 24.6p↓) and Gyeongbuk (61.1, 12.2p↓).

Last month’s nationwide occupancy rate was 81.2%, rising from the previous month in all regions, including the metropolitan area (89.9%, 2.3%p↑) and provinces (79.3%, 1.8%p↑). This is the first time in six months since November last year that the occupancy rate has exceeded 80%.

The main reason for non-move-in by buyers last month was 'delayed sale of the standard house (38.5%)'. This was followed by 'failure to secure tenants (27.7%)', 'failure to secure balance loans (16.9%)', and 'delayed sale of pre-sale rights (13.8%)'.

Meanwhile, a total of 26,801 households in 27 complexes nationwide will move in this month. Of these, 21,000 households (78.4%) are from the private sector, and 5,801 households (21.6%) are from the public sector. There are 12,237 households in 17 complexes in the metropolitan area and 14,564 households in 30 complexes in the provinces waiting to move in.

By region, Seoul and Gyeonggi have 11,339 households (42.3%), Busan and Gyeongnam 3,891 households (14.5%), and Gangwon 2,636 households (9.8%).

The Korea Housing Industry Research Institute explained, "Although the June forecast, May actual values, and occupancy rates have risen mainly in the metropolitan area and major cities, most regions still fall below the baseline. Due to polarization by region and complex, and ongoing concerns about the prolonged COVID-19 pandemic and its resurgence, it is still difficult to have an optimistic outlook."

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