The outlook for the housing market is diverging between the metropolitan area and regional areas in South Korea. In Seoul and Gyeonggi Province, expectations of rising housing prices and government measures to boost supply have improved business prospects. In contrast, regional areas are facing significant deterioration due to unsold inventory and weak demand.
On September 15, the Korea Housing Industry Research Institute reported that the housing business outlook index for September fell by 8.7 points to 79.9, down from 88.6 the previous month.
The housing business outlook index quantifies the sentiment of housing developers; a score below 100 indicates that more companies expect the market to worsen than improve.
In the metropolitan area, the outlook index rose by 3.1 points to 89.2. Seoul's index increased from 92.8 to 97.2, a rise of 4.4 points, while Gyeonggi Province saw a 7.4-point increase from 83.7 to 91.1. However, Incheon experienced a decline, dropping 2.5 points from 81.8 to 79.3.
The research institute noted, "In the metropolitan area, the continued rise in sales prices in key regions, along with expectations for improved business conditions due to the August 13 measures, contributed to a slight increase in the index. However, ongoing financial burdens from mortgage regulations and rising market interest rates, as well as a decrease in transaction volumes, continue to create uncertainty in the market."
Conversely, the outlook index for non-metropolitan areas fell by 11.2 points to 77.9. Jeju saw the largest drop, plummeting 32.8 points from 92.8 to 60.0. Ulsan and Chungbuk also experienced declines of 25.0 points, recording 75.0 and 62.5, respectively. Jeonnam fell by 19.1 points to 66.6, Gwangju dropped 16.8 points to 93.7, and Jeonbuk decreased by 15.0 points to 75.0.
Busan recorded a decline of 13.0 points to 64.7, while Gangwon (-9.8 points), Daejeon (-6.3 points), Gyeongnam (-6.3 points), and Gyeongbuk (-6.1 points) also saw worsened outlooks. In contrast, Daegu rose by 8.6 points to 90.4, and Sejong increased by 7.2 points to 100.0. Chungnam was projected to rise by 1.9 points to 76.9.
The research institute explained that while there had been expectations that the rising housing market in the metropolitan area would spread to regional areas, the recent months have seen a significant deterioration in outlook due to the announcement of policies targeting multiple homeowners, unsold inventory, and weak demand.
Expectations for financing conditions have improved somewhat. The national financing index for September is projected to rise by 2.0 points to 75.4. However, the material supply index is expected to fall by 6.6 points to 88.7.
The research institute stated, "The August 13 measures included financial support for housing supply projects, such as guarantees for project financing and expanded funding, as well as reduced guarantee fees, which likely contributed to improved expectations for financing conditions. However, the disappearance of hopes for the end of the Iran war and the ongoing burden of high construction costs and prices for key construction materials have led to a decline in the financing index."
* This article has been translated by AI.
Copyright ⓒ Aju Press All rights reserved.