Hong Nam-gi Shows Confidence: "Significant Change in Anxiety, Pre-Subscription Enthusiasm Continues"

Significant Change in Anxiety Driving the Rise
Announcement of 6,000 Private Pre-Subscription Houses by the End of This Month
Strict Measures to Track and Crack Down on Low-Priced Housing Speculation Until the End

Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance, is speaking while presiding over the '33rd Real Estate Market Inspection Ministers' Meeting' held at the Government Seoul Office Building on the 17th.
[Photo by Yonhap News]

Deputy Prime Minister and Minister of Economy and Finance Hong Nam-ki diagnosed on the 17th that a "significant change" has been detected in the anxiety that had driven price increases in the real estate market situation. He explained that as listings accumulate in the market and buying sentiment weakens, the upward trend in house prices is gradually slowing down, indicating a change in the flow. He also announced plans to finalize and announce 6,000 pre-sale units for private housing for the first time by the end of this month.

However, the industry points out that the government may have once again prematurely mentioned a "rosy outlook." Although the rate of increase has slightly slowed, the upward trend has not been broken, and in some areas such as Gangnam, record-high prices continue to be reported.

Government Says "Stability"... Experts Call It "Premature Champagne"

At the real estate market inspection meeting held at the Government Seoul Office on the same day, Deputy Prime Minister Hong said, "Since September, the price increase trend has continued to slow down, and recently, listings have increased and buying sentiment has weakened, which is being reflected in the perceptions of market participants."

He cited that the Seoul sales supply-demand index announced by the Korea Real Estate Board fell to the level before the Seoul mayoral by-election in April, and the KB Kookmin Bank's buyer dominance index also dropped to its lowest level since May last year.

In particular, the government emphasized that stability is becoming more pronounced, citing a recent housing price perception survey conducted by the Korea Research Institute for Human Settlements targeting real estate agencies nationwide, where about 80% responded that "housing prices in their area will no longer rise after three months," and the proportion expecting a decline increased more than fourfold compared to last September.

However, despite the government's diagnosis, some in the industry argue that it is still difficult to predict stability in the real estate market. Although the upward trend in apartment prices is gradually decreasing mainly in the metropolitan area, asking prices continue to soar, and instability in the jeonse (long-term lease) market has yet to be resolved.

The government has explained since early this year that "the market will stabilize soon" by mentioning interest rate hikes and supply expansion, but as the upward trend has not been broken for several months, there are also criticisms that it is another case of "premature self-praise."

Lee Eun-hyung, a senior researcher at the Korea Construction Policy Research Institute, said, "Considering the government's announcement last month of strengthened household loan management measures, it is hard to exclude the possibility that demand remains the same but buyers are waiting due to unfavorable conditions," adding, "It is inappropriate for the government to conclude the overall trend and mention stability based on short-term indicator changes."

Focus on Supply Expansion... Private Pre-sale Units Increased by 6,000

On the same day, the government announced plans to increase the private sector pre-sale units from the initial 101,000 units to 107,000 units and to finalize and announce 6,000 units within this month. Previously, the government had announced that from this year to the first half of 2024, a total of 163,000 pre-sale units would be conducted, including 62,000 public housing units and 101,000 private sector units such as private housing.

Deputy Prime Minister Hong said, "So far, a total of 14,000 pre-sale units have been conducted in two phases, and we plan to conduct three additional pre-sale rounds at intervals of about half a month until the end of the year to continuously provide opportunities for real demanders to own homes," adding, "We expect the enthusiasm for pre-sale applications to continue."

According to the Ministry of Land, Infrastructure and Transport, on the same day, the third pre-sale announcement for about 4,000 units in the 3rd new towns such as Hanam Gyosan and Gwacheon Juam was released, and supply in Incheon Gyeyang and Bucheon Daejang is scheduled for mid-next month.

Meanwhile, Deputy Prime Minister Hong also stated at the meeting that more focus will be placed on stabilizing the jeonse market and managing speculative demand for low-priced apartments with official prices below 100 million won.

Regarding speculation where some corporations and outsiders are accumulating low-priced houses in provincial areas through up-down contracts and name trusts, he strongly warned, "Regardless of type, frequency, or ripple effects, we will track them to the end and take strict measures such as requesting investigations if market disruption is confirmed."

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