64% of Real Estate Experts Say "House Prices Will Rise"... Brokerage Offices Predict 'Decline'

[Asia Economy Reporter Buaeri] This year, mixed forecasts emerged regarding the real estate market. While 64% of real estate experts predicted that house prices would rise, 63% of licensed real estate agents expected prices to fall.

Conflicting House Price Forecasts

According to the '2022 KB Real Estate Report' by KB Financial Group Management Research Institute on the 20th, 64% of experts forecast that nationwide housing sale prices will increase this year. The highest response was 20%, expecting prices to rise by 3-5%, followed by 19% expecting a 1-3% increase.

On the other hand, 6 out of 10 licensed real estate agents predicted that prices would decline this year. The largest share, 24%, expected prices to fall by more than 3%, and 21% anticipated a 1-3% decrease. KB Management Research Institute explained, "Compared to last year, when optimistic views were considerably high, the market sentiment has significantly contracted, and especially the atmosphere among on-site brokerage offices is perceived to be much lower."

Regarding house price forecasts in the metropolitan area, experts showed a high rate of optimism (74%). They cited supply shortages and policy changes after the presidential election as factors driving the increase. In Seoul, brokerage offices also showed many responses expecting a rise. Concerns about supply, including a shortage of listings, were high. In non-metropolitan areas, opinions between experts and brokerage offices were split evenly. The research institute explained that due to varying regional trends of slight increases and decreases, the overall outlook is expected to remain stable.

Both experts and licensed real estate agents forecast an upward trend in the jeonse (long-term lease) market this year. Notably, 22% of experts predicted that jeonse prices in the metropolitan area would rise by more than 5%, the highest share. Experts pointed to factors such as a decrease in jeonse supply following the Lease Protection Act, a shortage of move-in units, and increased jeonse demand due to mortgage loan regulations as reasons for the price increase. Brokerage offices also noted that instability in the jeonse market in Seoul and non-metropolitan areas is expected to continue.

When Will House Prices Stabilize?

Experts and brokerage offices anticipated that house prices would stabilize as early as the second half of this year or the first half of next year. Regarding the housing sales market, 25% of experts responded that prices would stabilize in the first half of next year, the highest share, while 33% of licensed real estate agents expected stabilization in the second half of this year. Both experts and licensed real estate agents forecast that the jeonse market would stabilize starting from the second half of this year.

As for the most necessary policies for the future housing market, experts and licensed real estate agents cited expanding supply through high-density urban development, deregulation and tax benefits for first-time homebuyers, and simplification of loan regulations. Private Bankers (PBs) shared similar views, with some responses emphasizing the need to ease the ban on loans exceeding 1.5 billion KRW.

Preferred Real Estate Type for Investment: 'Commercial Property'

The type of real estate preferred for investment by clients receiving wealth management (WM) services has also changed. For the first time since the survey began, 'commercial property' surpassed reconstruction and general apartments to take first place. The research institute stated, "Due to tax impacts, preference for housing has decreased, while preference for commercial properties and office buildings, which had been declining until 2019 due to oversupply, has rapidly increased." Despite the COVID-19 situation, office buildings showed strength with rents rising more than 5% year-over-year in both 2020 and last year, and commercial property transaction prices are rising rapidly.

Regarding promising real estate investments this year, experts, licensed real estate agents, and PBs all selected apartment pre-sales and reconstruction projects. Brokerage offices and experts responded with 23% and 27% respectively for new apartment pre-sales, while PB responses were also high at 18%. The research institute added, "Interest in redevelopment and reconstruction projects has significantly increased," and "This is believed to reflect expectations of deregulation ahead of the upcoming presidential election."

Additionally, brokerage offices and experts focused on the 'land market.' The research institute said, "Investment interest has greatly increased, especially among construction sector experts, supported by the potential for future development projects."

Meanwhile, the research institute conducted a survey on this year's housing sales and jeonse market outlook, stabilization timing, and necessary housing policies targeting 161 real estate market experts, 572 KB-affiliated licensed real estate agents, and 50 KB wealth management experts (PBs).

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