"COVID-19 and Price Ceiling on Pre-sale Apartments"... August Pre-sale Market Outlook 'Cloudy'

"August Nationwide HSSI Forecast at 76.6, Hovering in the 60-70 Range for 4 Months"
Significant Improvement in Sejong Sales Project Expectations Due to Administrative Capital Issue
Negative Perceptions Persist Mainly in Regulated Areas

August HSSI Forecast

[Asia Economy Reporter Onyu Lim] The outlook for nationwide pre-sale projects is deteriorating due to the implementation of the private land pre-sale price ceiling system. However, the atmosphere in Sejong and Daejeon has significantly improved due to the spread of the administrative capital relocation issue.

According to the Korea Housing Industry Association on the 11th, the August nationwide Housing Sales Sentiment Index (HSSI) forecast was 76.6. It showed a slight increase compared to 69.1 in the previous month but has been hovering between 60 and 70 for four consecutive months.

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

A representative from the Korea Housing Industry Association stated, "With the COVID-19 situation, the implementation of the pre-sale price ceiling system on the 29th of last month has worsened business operators' perceptions of new pre-sale projects," adding, "Due to the August 4th supply measures and discussions on the administrative capital relocation, market volatility is greatly expanding, so close monitoring of the supply market environment is necessary."

The August HSSI forecast generally declined in the Seoul metropolitan area and major provincial cities where regulations are concentrated, while it rose in non-regulated areas. Accordingly, the outlooks for the metropolitan area, major provincial cities, and other provinces appeared similar.

By region, Seoul (85.4, up 6.2 points) recorded a slight increase from the previous month, reaching the 80-point level. However, in regulated areas such as Gyeonggi (78.0, down 0.9 points), Incheon (74.3, down 1.3 points), Busan (61.2, down 13.8 points), Daegu (66.6, down 11.9 points), and Gwangju (76.9, down 3.1 points), the forecast declined, spreading the perception that the pre-sale market will not be favorable.

However, as the issue of administrative capital relocation became public, Sejong (105.0, up 28.6 points) exceeded the baseline (100.0) for the first time in a year, significantly improving expectations for the pre-sale market.

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