Despite Deregulation, Negative Sales Market... Polarization of the Sales Market Accelerates

Despite the government's relaxation of real estate regulations, the apartment sales outlook index for May has decreased. This is interpreted as a result of the deepening polarization in the sales market, with the apartment sales outlook in local areas worsening again, unlike in the metropolitan area.

[Image source=Yonhap News]

According to the Korea Housing Industry Association (KHIA) on the 11th, the apartment sales outlook index for May is expected to fall by 7.5 points from the previous month to 77.7. While the metropolitan area is expected to rise by 2.8 points, the local metropolitan cities are forecasted to drop by 3.9 points, and other local areas by 14.1 points. This index is a comprehensive indicator that assesses the conditions of complexes about to be sold or currently on sale from the supplier's perspective. It is surveyed monthly through questionnaires targeting about 500 member companies of the Korea Housing Association and the Korea Housing Construction Association engaged in housing projects.

In some local metropolitan cities such as Seoul (up 8.4 points, 86.5→94.9), Gyeonggi (up 0.9 points, 87.2→88.1), Daegu (up 4.0 points, 76.0→80.0), and Busan (up 2.5 points, 78.3→80.8), the outlook index slightly increased, but in other regions, the outlook index declined.

In particular, other local areas are expected to see a drop of more than 10 points, including Jeonbuk (down 21.9 points, 93.3→71.4), Jeju (down 16.9 points, 87.5→70.6), Chungnam (down 16.0 points, 88.2→72.2), Gangwon (down 15.1 points, 81.8→66.7), Jeonnam (down 15.2 points, 94.1→78.9), Gyeongnam (down 11.7 points, 86.7→75.0), and Gyeongbuk (down 10.2 points, 82.4→72.2). The outlook index also sharply declined in Daejeon (down 16.3 points, 90.0→73.7) and Ulsan (down 13.6 points, 82.4→68.8).

[Image courtesy of Housing Industry Research Institute]

This is analyzed as a result of the intensified polarization in the apartment sales market following the relaxation of real estate regulations. KHIA explained, “Since the relaxation of real estate regulations, the apartment sales outlook in the metropolitan area has turned positive, but the outlook for local apartment sales has worsened again. This appears to be due to overall concerns about the local economy downturn and the recent impact of jeonse fraud, which has dampened the motivation of gap investors rather than actual buyers to purchase apartments in local areas.”

They added, “In the depressed housing market situation, sales prices are rising, raising concerns about both subscription concentration and unsold units simultaneously. Housing developers need to conduct thorough demand surveys and carefully check sales timing and prices.”

The sales price outlook index for this month recorded 100.0, up 9.1 points. This rise in sales price outlook is attributed to the increase in construction material prices and the relaxation of sales price regulations. With the market in a slump and sales prices rising, polarization in the subscription market is expected to deepen, focusing on complexes with price competitiveness and favorable locations.

The sales volume outlook index recorded 82.1, down 2.3 points. It remained around the 80-point level similar to the previous month. Since the beginning of this year, loan interest rates have rapidly declined and sales outlook has somewhat improved. With the increase in push-out sales due to the maturity of bridge loans at the end of June, a certain level of sales volume is being maintained. However, the unsold units outlook index is expected to increase by 6.0 points. This is interpreted as sales proceeding amid uncertainty about the success of sales projects.

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