Continued Optimism for Housing Sales in the Seoul Metropolitan Area... Concerns Over Deterioration in Some Provinces

[Asia Economy Reporter Ryu Taemin] It has been revealed that home construction companies continue to have high expectations for the housing sales market, especially in Seoul and the metropolitan area. However, some regions in the provinces show lower expectations, resulting in regional differences.

On the 13th, the Korea Housing Industry Research Institute (KHIRI) announced that the nationwide Housing Sales Sentiment Index (HSSI) forecast for July recorded 96.0, down 6.5 points from the previous month. Since December last year, the index has remained above the 90-point mark for eight consecutive months, indicating a favorable outlook for the housing sales market. The HSSI is an indicator that comprehensively assesses the sales conditions of complexes that are about to be sold or currently on sale from the supplier's perspective. It is surveyed monthly among housing businesses, and a value above the baseline of 100 indicates a positive outlook on the sales market.

The sales market in Seoul and the metropolitan area shows growing expectations. Seoul’s forecast was 109.5, slightly down by 8.9 points from the previous month but still above the baseline. Incheon (102.8) and Gyeonggi (102.2) also recorded forecasts above the baseline despite declines compared to last month.

KHIRI analyzed, “The forecast is being adjusted mainly in the metropolitan area and provincial metropolitan cities where the previous month’s forecast had risen sharply. Although the forecast dropped by 10 to 20 points compared to the previous month, this is considered a base effect from the previous month, and the forecast still remains in the 90 to 100 range, indicating a favorable outlook.”

On the other hand, some provinces saw their forecasts fall below the baseline. Daegu (89.2), Busan (91.3), and Ulsan (94.1) recorded values about 6 to 13 points lower than the previous month, falling below the baseline.

KHIRI explained, “While expectations are concentrated on the sales market in Seoul and the metropolitan area, the actual figures in the provinces have dropped sharply, creating different atmospheres by region.”

The HSSI forecast for this month’s sales volume was 101.2, remaining above the baseline for six consecutive months since February, while the unsold housing HSSI forecast (82.9) was in the low 80s.

KHIRI stated, “Continuous housing price increases, abundant demand for new housing priced lower than market prices, and the government’s supply expansion policy such as the 2·4 measures seem to be supporting a favorable sales market environment by maintaining interest in the sales market. Although limited, the government’s supply policy could be an opportunity for housing businesses to expand their business areas, so it is necessary to actively explore ways to utilize this and prepare response strategies.”