Apartment Pre-Sale Outlook Worsens Under Strict Loan Regulations... Sharp Decline in Seoul and Gyeonggi Metropolitan Area

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It has been analyzed that the nationwide apartment pre-sale outlook for this month will deteriorate significantly due to the impact of the 6·27 loan regulation implementation. In particular, the outlook has dropped sharply in the Seoul metropolitan area, which is the primary target of the loan regulations.

The Housing Industry Research Institute announced on August 7 that, according to a survey of housing developers, the nationwide apartment pre-sale outlook index for August stood at 75.1, a decrease of 21.9 points compared to the previous month.

This index is a numerical indicator calculated by the Housing Industry Research Institute based on surveys of housing developers regarding the conditions of apartment complexes that are about to be or are currently being pre-sold. The index ranges from 0.0 to 200.0. If the index exceeds 100.0, it indicates a positive pre-sale outlook; if it is below 100.0, it indicates a negative outlook.

In the Seoul metropolitan area, the index dropped by 32.5 points to 81.4, while in non-metropolitan areas, it fell by 19.7 points to 73.7. Within the metropolitan area, Seoul recorded a decrease of 32.6 points to 88.6, Gyeonggi Province dropped by 33.3 points to 78.8, and Incheon fell by 31.4 points to 76.9.

The Housing Industry Research Institute stated, "The impact of the 6·27 real estate measures, which include strong loan regulations, as well as heightened caution regarding additional loan restrictions, have significantly dampened buying sentiment. The sharp decline in apartment transaction volume in the Seoul metropolitan area in July and the slowdown in price increases appear to have negatively affected the outlook for the metropolitan area apartment pre-sale market."

In non-metropolitan areas, all regions were also expected to see declines. North Gyeongsang Province dropped by 42.9 points, South Jeolla Province by 31.7 points, North Chungcheong Province by 30.0 points, South Gyeongsang Province by 25.0 points, and Gangwon Province by 24.2 points, in that order.

The Housing Industry Research Institute added, "In non-metropolitan areas as well, the impact of the real estate market contraction due to the strong loan regulations in the metropolitan area, along with concerns about the possibility of further housing market regulations in the future, have been reflected in the outlook. However, considering precedents where strong demand-suppression policies under previous administrations led to a rebound after a short-term decline of three to six months, it appears that not only short-term loan regulations but also housing supply measures will be necessary."

The institute further noted, "If the effect of supply expansion is delayed, the negative outlook among developers due to regulations may actually reduce supply, which could in turn lead to an even greater increase in housing prices going forward."

Meanwhile, the pre-sale price outlook index for August is projected to be 100.0, down 15.9 points from the previous month. This was influenced by weakened demand due to loan regulations and a decline in new housing construction volume, which led to reduced demand for raw materials and labor, resulting in lower costs.

The pre-sale volume outlook index dropped by 25.8 points from the previous month to 77.3, while the unsold volume outlook index rose by 4.8 points to 97.0. This is analyzed as reflecting the sharp decline in transaction volume and the shift of market demand to a wait-and-see stance due to the loan regulations.

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