Housing Business Outlook in December 'Cloudy'... Polarization Trend Between 수도권 and 지방

National Housing Business Survey Index (HBSI) Forecast 74.0
Significantly Below Baseline 100... "COVID-19 and Government Regulations"

Apartment skyline in Seoul [Image source=Yonhap News]

[Asia Economy Reporter Lim On-yu] The housing business outlook for December is expected to remain bleak due to economic difficulties caused by the novel coronavirus disease (COVID-19) and the continuation of the government's regulatory policy stance. Additionally, the housing market sentiment experienced by developers is becoming polarized depending on the region.

According to the Korea Housing Industry Research Institute on the 2nd, the nationwide Housing Business Survey Index (HBSI) forecast for this month was recorded at 74.0. This marks a 3.6-point (p) drop compared to the previous month, falling significantly below the baseline (100).

The HBSI is an indicator that comprehensively assesses the housing business market from the supplier's (construction companies') perspective, based on a survey of about 500 member companies affiliated with the Korea Housing Association and the Korea Housing Builders Association. If the forecast exceeds the baseline of 100, it means more construction companies expect the market to improve than those who do not; if it falls below 100, the opposite is true.

The HBSI forecast has hovered around the 70s for three consecutive months, recording 72.2 in October and 77.6 in November, continuing through December. This is interpreted as the ongoing difficulty in the housing business market.

However, the atmosphere varied by region. While the metropolitan area, Sejong, and Ulsan showed improvements in housing business performance and outlook, fostering expectations for the housing market, the housing business outlook in provincial areas remains pessimistic.

The Seoul HBSI forecast remained steady at 85.1 compared to the previous month. Although there is concentrated interest in public-led reconstruction and redevelopment projects, delays in the passage of related legislation prevented the index from surpassing the baseline.

Sejong recovered to the baseline after 17 months, recording 100.0. Ulsan (94.4) rose for the third consecutive month, maintaining the 90s, while Daejeon (84.0) and Gwangju (83.3) increased by about 5 to 6 points, reaching the 80s. However, Busan is expected to fall to the 70s, dropping 4.6 points from the previous month.

The provinces (77.4) showed an increase from the previous month but the housing business outlook remained bleak. Chungbuk recorded 61.5, Gangwon 64.2, Jeju and Gyeongbuk 66.6, Jeonbuk 68.7, and Chungnam 75.0, all below the national average forecast.

A representative from the Korea Housing Industry Research Institute stated, "With the HBSI hovering around the 70s for three months, it is difficult to be optimistic about the housing business market. The difficulties in the housing business in provincial areas such as Gangwon, Jeju, and Chungbuk are expected to continue through December."