COVID-19 and the June 17 Measures... July Housing Market Outlook 'Cloudy'

[Asia Economy Reporter Onyu Lim] The nationwide housing business outlook is expected to deteriorate due to the June 17 real estate measures and the spread of the novel coronavirus disease (COVID-19).

The Korea Housing Industry Research Institute announced on the 9th that the nationwide Housing Business Survey Index (HBSI) forecast for July recorded 68.7, a decrease of 17.8 points compared to the previous month.

The HBSI is an index that comprehensively assesses the housing business outlook from the supplier's (construction companies') perspective, based on a survey of about 500 member companies affiliated with the Korea Housing Association and the Korea Housing Builders Association. If the forecast 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, "As economic difficulties due to COVID-19 are expected to prolong, and the government strengthens real estate regulations including loans, the burden on housing developers to proceed with projects is increasing."

By region, Seoul's forecast dropped 30.8 points from the previous month to 75.4, marking the largest decline since October 2018. Incheon (56.7) fell 40.6 points from the previous month, the largest drop nationwide, and Gyeonggi (54.9) also saw a 37.4-point decrease in its forecast.

Among provincial metropolitan cities, except for Ulsan (77.7), Busan (55.5), Daegu (65.5), Gwangju (69.5), and Daejeon (54.1) remained in the 50-60 range, expanding negative perceptions about business improvement.

The redevelopment and reconstruction order outlooks were 83.0 and 84.9, respectively, down 8.7 points and 8.4 points from the previous month. The Korea Housing Industry Research Institute forecasted, "As regulations on maintenance projects are strengthened, especially focusing on reconstruction projects, including stricter safety inspections, strengthened resident requirements for association members, and the full implementation of the excess profit recovery system, negative outlooks on maintenance projects are expected to continue for the time being."

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