March Apartment Sales Outlook Rises... Recovery Trend Due to Regulation Easing

Housing Industry Research Institute Survey
National Pre-sale Outlook Index Rises by 2.5 Points

Thanks to the government's deregulation efforts, sentiment in the apartment pre-sale market continued to improve. The apartment pre-sale outlook index for March stood at 73.6 nationwide, still below 100 and thus at a low level, but it has shown improvement for five consecutive months since October last year.

[Image source=Yonhap News]

According to the 'March 2023 Apartment Pre-sale Outlook Index' released by the Korea Housing Industry Research Institute (KHIRI) on the 9th, the nationwide apartment pre-sale outlook index this month recorded 76.3, rising 2.5 points from the previous month. The nationwide apartment pre-sale outlook index has increased for five consecutive months since it sharply dropped to 37.1 in October last year, then rose to 44.6 in November, 52.4 in December, 58.7 in January this year, and 71.1 in February. However, since an index above 100 indicates a positive outlook and below 100 indicates a negative one, the current level remains low.

[Image courtesy of Housing Industry Research Institute]

This index is a comprehensive indicator that reflects the conditions of complexes about to be pre-sold or currently on sale from the supplier's perspective. It is surveyed monthly through questionnaires sent to about 500 member companies of the Korea Housing Association and the Korea Housing Construction Association engaged in housing projects.

Seoul's index surged significantly from 61.9 last month to 82.2 this month, and Ulsan's rose from 50.0 to 70.6. Analysts attribute this positive impact on Seoul's apartment pre-sale outlook to the government's strong deregulation policies, financial sector interest rate cuts, easing of loan restrictions, and recognition of bottom prices in regions that had experienced sharp declines. Ulsan appears to have recovered to a level similar to other regions since its outlook index hit a low of 26.7 in October last year.

Additionally, other metropolitan areas showed overall improvement in pre-sale outlooks: Jeonbuk increased by 14.3 points (71.4→85.7), Busan by 8.0 points (64.0→72.0), Chungbuk by 7.1 points (78.6→85.7), Incheon by 6.8 points (54.5→61.3), Gyeonggi by 6.0 points (66.7→72.7), Jeonnam by 5.9 points (76.5→82.4), Daegu by 3.3 points (53.8→57.1), and Daejeon by 1.7 points (66.7→68.4).

[Image courtesy of Housing Industry Research Institute]

However, some regions are expected to see further deterioration in outlook. Gyeongnam dropped the most by 16.1 points (86.7→70.6), followed by Gwangju down 8.6 points (80.0→71.4), Gangwon down 7.7 points (76.9→69.2), Gyeongbuk down 7.6 points (90.0→82.4), Jeju down 5.6 points (77.8→72.2), Sejong down 4.1 points (68.8→64.7), and Chungnam down 0.9 points (84.2→83.3). A KHIRI official explained, “It appears that the pre-sale market in small and medium-sized provincial cities cooled rapidly and recovered slowly.”

The pre-sale price outlook index for March is expected to rise by 7.8 points compared to February, and the pre-sale volume outlook index is also expected to increase by 7.8 points. However, the pre-sale price outlook index remains at 92.9, still not turning positive. This is likely because, although buyer sentiment has somewhat recovered following the 1·3 measures, continuous increases in unsold inventory still make it difficult for developers to finalize pre-sale schedules.

The unsold inventory outlook index slightly increased by 1.8 points from the previous month. This index decreased by 5.9 points from 135.8 in December last year to 129.9 in January this year, then sharply dropped by 14.8 points to 115.1 in February, but slightly rose again to 116.9 in March. The fluctuation in the unsold inventory outlook index seems to reflect the difficulty housing developers face in judging between expectations for the government's soft landing measures and the actual increase in unsold inventory statistics.

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