Jeonse Prices Expected to Keep Surging Next Year... Forecasted 6.5% Increase

Korea Construction Industry Research Institute 2022 Real Estate Outlook
Double Pricing Phenomenon Resolved as Contract Renewal Claims Increase
Sale Prices Show Moderated Rise Compared to This Year... Nationwide 2%

2022 Sales and Jeonse Price Outlook

Analysis suggests that the upward trend in real estate jeonse prices seen this year will continue into 2022.

On the 4th, the Korea Construction Industry Research Institute held the '2022 Construction and Real Estate Market Outlook Seminar' at the Construction Hall in Gangnam-gu, Seoul, stating that "nationwide sale and jeonse prices are expected to rise by 2.0% and 6.5%, respectively."

Regarding sale prices, the increase is expected to be somewhat lower than this year's rise of 10%. The 2022 forecast is 3.0% for the metropolitan area, 1.0% for provincial areas, and 2.0% nationwide.

Senior Research Fellow Kim Seong-hwan said, "Next year's market will be highly volatile," adding, "However, it is true that macroeconomic conditions such as inflation concerns and ongoing tapering are unfavorable for maintaining the upward trend."

He continued, "This is the first time since 1993 that the nationwide housing price increase has exceeded the inflation rate," noting that prices formed at a high point will be a burden for buyers, and thus a slowdown in the upward trend is expected.

Jeonse prices are forecasted to rise by 6.5%, similar to this year. A key variable is the volume of contracts with exhausted renewal rights entering the market starting August next year.

Senior Research Fellow Kim said, "Currently, there is a large gap between existing contracts and new contracts, which does not appear in the index, but the jeonse price increase is significant," adding, "After August next year, volumes with exhausted contract renewal rights will be traded at market prices, continuing a rise similar to this year."

A tense standoff between sellers and buyers is also expected.

Kim analyzed, "Sellers have little incentive to lower asking prices, and buyers may find it difficult to enter the sales market readily, so this stalemate is likely to continue."

Domestic construction orders in 2022 are expected to increase by 0.2% from the previous year to 214.8 trillion won, and construction investment is forecasted to recover by 2.4%.

Research Fellow Park Cheol-han said, "Leading indicators such as orders look very positive," but analyzed, "Coincident indicators like construction investment are delayed in recovery due to high construction costs and sluggish civil engineering investment."

The Korea Construction Industry Research Institute emphasized the active use of the construction sector to resolve economic uncertainties next year.

Research Fellow Park stated, "Economic uncertainty is expected to remain high overall, so it is necessary for the government to actively increase public construction investment to mitigate economic uncertainty and strengthen domestic economic recovery through job creation, thereby expanding the momentum for economic recovery."

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