Construction Industry Outlook Plummets Amid Weakening Buying Sentiment... Real Estate Market at a Crossroads

Preliminary Subscription is a Hit

On the 31st, a property listing notice posted at a real estate agency office in Dobong-gu, Seoul

Following the government's tightening of loan regulations, apartment purchase sentiment has sharply contracted, and the construction industry outlook has also plummeted. The government has warned of a 'peak theory,' and with the 3rd phase new town pre-sale attracting strong interest, there are observations that the real estate market is at a critical crossroads.

According to the Korea Construction Industry Research Institute on the 31st, the Construction Business Survey Index (CBSI) for October recorded 83.9, down 11.0 points (p) from last month (94.9). The 11-point drop in the construction CBSI within a month is the largest decline in the past 1 year and 9 months.

If the CBSI falls below the baseline of 100, it means that more companies view the current construction market pessimistically than optimistically; if it exceeds 100, the opposite is true.

The sharp decline in CBSI is largely due to a decrease in new construction orders caused by sluggish large-scale reconstruction, redevelopment, and public projects. This month's new construction order index was 84.2, showing the largest monthly drop (22.4p) this year.

The government's household debt management strengthening plan announced on the 26th also had an impact. Researcher Park Cheol-han said, "Concerns that future financial regulations will tighten and worsen funding conditions seem to have influenced the index decline."

Alongside the contraction in the construction industry, housing market purchase sentiment has also rapidly cooled.

According to the Korea Real Estate Board, last week’s Seoul apartment sales demand-supply index (as of the 25th) was 100.9, close to the baseline of '100,' marking a decline for seven consecutive weeks.

A sales demand-supply index above 100 indicates strong purchase sentiment; the fact that it has been steadily falling recently after being well above 100 for some time means purchase sentiment is weakening.

The number of listings posted online has also increased. According to Asil, a real estate big data company, the total number of apartment listings in Seoul reached about 43,000, an increase of approximately 10% compared to a month ago.

The 'listing lifespan' of Seoul apartment sales has also sharply increased. Until last year, listings generally sold within about 20 days, but recently it has taken nearly a month.

According to the real estate analysis platform Real Estate Jiin, the average survival days of Seoul apartment listings over the past year increased from 23 to 28 days, a rise of 5 days. Listing survival days refer to the period from when a listing is registered until it disappears due to a successful transaction or other reasons.

The representative of A Real Estate Agency in Dangsan-dong, Seoul, said, "Prices have risen too much in a short period, and sellers are raising their asking prices even higher, so buyers are just turning away."

While signs of market contraction are appearing in various places, the subscription market continues to attract strong interest.

The Korea Land and Housing Corporation (LH) announced on the 31st that the cumulative number of visitors to the pre-sale subscription website since the start of the 2nd phase pre-sale subscription on the 25th reached nearly 900,000. On the first day of pre-sale subscription, the 25th, the number of visitors exceeded 240,000, and the maximum simultaneous connections reached 3,282.

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