62% of Citizens Expect Housing Prices to Rise in the Second Half of the Year... Lowest Ever Forecast for Decline

Real Estate 114 Survey of 715 Adults Nationwide
7 out of 10 Expect Jeonse Prices to Rise

[Asia Economy Reporter Kim Hyemin] Six out of ten Koreans expected housing prices to continue rising in the second half of this year. The outlook for jeonse (long-term lease) prices was even higher at 70%.

According to the results of the "2021 Second Half Housing Market Outlook" survey conducted by Real Estate 114 from the 1st to the 15th of this month, targeting 715 adults nationwide, 62% of respondents expected housing prices to rise in the second half. Real Estate 114 stated, "Although this is a decrease compared to 70% in the first half, considering that past surveys struggled to exceed the 50% level, it is still a high level."

On the other hand, only 7% of respondents expected sales prices to fall, the lowest level since the survey began in 2008.

Among those who expected sales prices to rise, 42.34% cited "rising apartment prices in Seoul and the metropolitan area" as the main reason. This was followed by "worsening supply shortages in major urban centers such as Seoul" (22.07%), "balloon effect on less risen areas" (11.71%), and "strengthened policy expectations ahead of the presidential election" (6.53%).

Conversely, among those who expected sales prices to fall, 34.62% pointed to the "possibility of interest rate hikes" as the main reason. Real Estate 114 explained, "Concerns about possible U.S. interest rate hikes and inflation due to economic growth are increasing, making it possible for the base rate to rise as early as the end of the year." This was followed by "lack of transactions due to price burden" (28.85%) and "weakened buying demand due to loan regulations" (11.54%).

Regarding the jeonse market outlook, seven out of ten people expected prices to rise in the second half of this year. Only 4% of respondents expected prices to fall.

Among those who expected jeonse prices to rise, 23.51% cited "lack of new supply in popular areas such as Seoul" as the reason. Another 23.51% believed that jeonse demand would increase due to weakened buying sentiment. Other reasons included ▲ the impact of the implementation of the Three Lease Laws (23.12%), ▲ landlords' preference for monthly rent leading to a shortage of jeonse supply (17.73%), and ▲ temporary increase in jeonse residence due to pre-sale subscriptions (7.51%).

Among those who expected jeonse prices to fall, 46.67% selected "risk of returning jeonse deposits due to high jeonse prices" as the main reason.

Meanwhile, when asked about the key variables for the second half of this year, the largest group (27.41%) answered whether the government’s real estate regulations on loans and taxes would continue. Other factors cited included ▲ movements in the Bank of Korea’s base interest rate (15.24%), ▲ the 2022 presidential election issue (13.15%), ▲ external economic conditions such as the speed of domestic and international economic recovery (12.59%), ▲ government housing supply policies such as the 3rd New Town project (12.45%), and ▲ whether the unstable trend in jeonse prices would continue (7.41%).

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