NH Investment & Securities "High Possibility of Stable Real Estate Market in the Second Half"

Publication of the 2023 Second Half Real Estate Outlook Report

NH Investment & Securities analyzed that the real estate market in the second half of this year is likely to show a firm upward trend. The three main keywords identified were 'policy, jeonse and monthly rent market, and subscription competition rate.'

On the 25th, NH Investment & Securities announced the publication of a real estate report titled "2023 Second Half Real Estate Market Outlook: Tug of War Between Weakness and Rebound" on this topic. The report reviews the real estate market in the first half of 2023 and forecasts the market for the second half.

The basis for the firm upward trend is that while there are many factors driving prices up in the current market, there are still variables that could cause a decline. On the price increase side, they cited increased transaction volume, easing of redevelopment regulations, rising housing purchase consumer sentiment, increased subscription competition rates, and a decrease in housing supply. On the downside, they pointed to instability in the jeonse market, economic slowdown, household loan burdens, and an increase in unsold properties in provincial areas.

The most important factor for the price increase is the rise in sales transaction volume, with the proportion of transactions that increased compared to the previous transaction also rising. Apartment sales transactions nationwide increased about 2.3 times from 17,841 in January to 40,746 in May.

In Seoul, transactions increased about 3.2 times from 1,161 in January to 3,711 in May. The proportion of transactions with price increases compared to previous transactions also rose, accounting for 35% of all transactions in January and reaching 46.1% in June, the highest proportion in the past year.

Additionally, the easing of redevelopment regulations and active support from the Ministry of Land, Infrastructure and Transport and local governments have raised expectations for reconstruction projects, leading to increased transaction volumes and prices centered on major reconstruction complexes. In particular, in key redevelopment areas such as Apgujeong, Yeouido, and Mokdong, transaction volumes have surged and record prices have been reported despite these areas being designated as land transaction permission zones.

The factors for price decline were seen as the continued simultaneous drop in jeonse prices. As both sales prices and jeonse prices fall, the gap between sales prices and jeonse prices does not narrow, which could limit the increase in purchase demand. Furthermore, the downward revision of the economic growth rate to 1.4% in the second half and the pessimistic economic sentiment index were also cited as market instability factors.

Jung Bohyun, Senior Researcher of Real Estate at NH Investment & Securities Tax Center (NH WM Masters Specialist), said, "The real estate market in the second half will maintain the recovery trend that began in the first half due to the effects of deregulation policies, but the extent of the increase will be limited," adding, "Polarization by region and differentiated markets by product will develop, and a sorting process will begin in earnest."

Jung Yuna, Head Researcher of Real Estate at NH Investment & Securities, explained, "Although the market is recovering faster than expected, variables such as the decline in jeonse prices and the burden of household loan interest rates remain, and these variables need to be resolved for a full-fledged upward shift to occur."

NH Investment & Securities identified effective strategies for the second half as subscription opportunities for the homeless and reconstruction apartments for actual demand buyers. Since sales are scheduled in major areas with good locations and the subscription system reform has increased the proportion of lottery-based allocations, it is recommended that the homeless prioritize access to the sales market.

For actual demand buyers, it is recommended to utilize the regulation that allows reconstruction association members who acquire substitute housing during the project implementation period to live there and, upon moving into the newly built housing, sell the substitute housing within three years to receive capital gains tax exemption.

Jung Bohyun, Advisor of NH WM Masters, suggested, "Subscription is an effective strategy not only for the homeless but also for one-homeowners," and added, "The relaxation of the disposal timing for previous homes in temporary two-home ownership situations should be pursued as a strategy to create opportunities to move to higher-grade areas."

Meanwhile, NH Investment & Securities publishes real estate reports monthly and plans to continue releasing in-depth reports on market issues and major regional analyses. The full report can be found on the official NH Investment & Securities blog.

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