"Cautious Expectations for 'Recovery' in the 수도권 Housing Market"

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[Asia Economy Reporter Im On-yu] The housing market, which had been stagnant due to strengthened real estate regulations and the impact of the novel coronavirus disease (COVID-19), is showing signs of recovery, mainly in the Seoul metropolitan area.

According to the Korea Housing Industry Research Institute (KHIRI) on the 10th, the nationwide Housing Sales Sentiment Index (HSSI) forecast for November recorded 82.2. It rose by 9.6 points (p) compared to the previous month, recovering above the 80 mark. The HSSI is an index that comprehensively assesses the sales conditions of apartment complexes that are about to be sold or currently on sale from the supplier's perspective. It is surveyed monthly among housing business companies (members of the Korea Housing Association and the Korea Housing Builders Association). An HSSI above 100 indicates a positive sales outlook, while below 100 indicates the opposite.

By region, Seoul (97.8), Incheon (96.9), Gyeonggi (93.0), Sejong (94.1), Daejeon (91.3), and Gwangju (90.9) ? including the Seoul metropolitan area and some provincial metropolitan cities ? recorded forecast values above 90. Seoul and Gyeonggi rose by 8.1p and 11.9p respectively compared to the previous month, with Incheon showing a significant increase of 25.5p. Sejong and Gwangju also saw their forecasts jump by 11.8p and 10.9p respectively from the previous month. Although other provinces showed an upward trend in the HSSI forecast this month compared to the previous month, Jeju (62.5), Gangwon (66.6), Chungbuk (66.6), and Chungnam (66.6) remained in the 60 range.

A KHIRI official explained, "Despite the prevailing negative perception of the housing sales market due to the regulatory tightening trend and COVID-19, local expectations for the sales market have formed around specific areas as new sales are scheduled in some land development districts and public land such as Godeok Gangil and Hanam Gam-il." He added, "Due to a combination of factors such as instability in the jeonse market, expectations of capital gains, and a decrease in unsold units, there is growing optimism that sales performance will improve, especially in complexes with competitive locations and pricing."

However, there are also variables. The implementation of the private land price ceiling system may delay the supply and sales of new housing. A KHIRI official stated, "Due to the regulatory tightening trend and unstable economic conditions, it will remain difficult to proceed with new sales projects in regulated areas."

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