November Housing Business Outlook Red Light... Significant Drop in Private Land Order Index

Jusanyeon, November Housing Business Sentiment Index

November Housing Business Sentiment Index Trends / Data provided by Housing Industry Research Institute

[Asia Economy Reporter Hwang Seoyul] Except for Daegu and Ulsan, the housing business outlook across the country is expected to be negative. In a situation where financing is difficult, especially with significant challenges anticipated in securing private land sites, voices are calling for alternatives such as easing real estate regulations and providing public financial support.

According to the 'November Housing Business Outlook Index' released on the 14th by the Housing Industry Research Institute (hereinafter referred to as Jusan-yeon), the national outlook index for this month was 40.5, down 7.3 points from the previous month.

The Housing Business Outlook Index is calculated monthly by surveying housing business operators on their business performance and outlook. It is a supply market indicator that comprehensively assesses the housing business from the supplier's perspective. The survey targets members of the Korea Housing Association and the Korea Housing Construction Association. The index baseline is 100, with below 85 indicating a downturn phase, 85 to less than 115 indicating a stable phase, and 115 or above indicating an upturn phase.

The metropolitan area (37.0) was recorded at 37.0, down 10.8 points from the previous month. Incheon and Gyeonggi fell more than 10 points from the previous month, recording 32.3 and 29.7 respectively. Seoul dropped 7.3 points from last month to 48.9.

In the provinces, many regions also fell more than 10 points, resulting in a decline of 8.8 points from last month to 38.4. Among the five major metropolitan cities, Gwangju fell 14.9 points to 28.5, while Busan and Daejeon dropped 8.2 points and 8.7 points to 40.0 and 39.1 respectively. Outside the metropolitan cities, all other provincial areas declined compared to the previous month, with Chungbuk, Jeonbuk, Gyeongbuk, Gyeongnam, and Jeju experiencing decreases of more than 10 points.

However, Daegu (45.4) and Ulsan (38.0) rose by 6.1 points and 2.8 points respectively. Jusan-yeon analyzed this as "a reflection of the expectation for housing business recovery due to the lifting of regulatory area designations in non-metropolitan regions."

The November construction order index and financing index maintained their existing downward trends. In the housing construction order index, the decline in private land sites (81.5→56.3) was particularly notable. The financing index also fell concurrently (40.2→37.3). Jusan-yeon interpreted this as "private housing developers facing significant difficulties in housing construction projects due to tightened financing."

Jusan-yeon stated, "With rising construction costs and a downturn in the real estate market, expected returns from real estate project financing (PF) have decreased and risks have increased, making it difficult to convert bridge loans into real estate PF loans." They added, "This poses a serious threat to housing construction developers' funding and project stability." They further suggested, "Proactive measures such as easing real estate-related regulations and expanding public financial support and guarantee assistance are necessary."

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