"Housing Market Improves"... May Housing Business Outlook Hits Highest in 4 Years

Busan, Daejeon, and Other Provinces Surpass Baseline
Performance Figures Greatly Exceed Initial Forecasts

[Asia Economy Reporter Ryu Taemin] The nationwide housing market outlook index surpassed the baseline (100) for the first time in 47 months since June 2017, driven by expectations of revitalization in small-scale housing maintenance projects and the easing of redevelopment and reconstruction regulations in Seoul. Last month's actual performance also increased significantly (by 17.5 points) compared to the forecast, raising the possibility of housing project expansion.

According to the Korea Housing Industry Research Institute on the 9th, the nationwide Housing Business Survey Index (HBSI) outlook for May was 101.2, up 10.6 points from the previous month. 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. When this outlook 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.

In Seoul, expectations for housing projects appear to be improving mainly in maintenance project sites due to anticipation of regulatory easing for redevelopment and reconstruction projects. According to the Housing Industry Research Institute, Seoul's HBSI outlook for May was 116.6, reaching the 110 level for the first time in 2 years and 8 months. Compared to the same period last year, it rose by 35.9 points, reflecting expectations following changes in the leadership of Seoul City and the Ministry of Land, Infrastructure and Transport.

The actual performance for April appeared higher than initially forecast, suggesting a revival in the housing market. The April HBSI actual was 103.5, up 17.5 points from the previous month and 12.9 points higher than the forecast. When the actual performance exceeds the forecast for the month, it indicates that housing suppliers actively pursued housing projects.

In Daejeon (100) and Ulsan (95), positive outlooks prevailed, supported by announcements of new public housing sites. Busan (106.6) recovered above the 100 mark, rising more than 15 points from the previous month.

By factor, redevelopment (102.8) and reconstruction (98.5) rose 9.1 points and 5.8 points respectively from the previous month, indicating a shift in negative perceptions toward maintenance projects.

A representative from the Korea Housing Industry Research Institute stated, “Since regulations related to housing projects continue, thorough pre-monitoring of project risks internally is necessary.”