Housing Market, Move-in Performance, and Sales Market All Show 'Red Light' Warning

[Asia Economy Reporter Ryu Tae-min] The housing market outlook is deteriorating due to transaction stagnation and falling house prices in suburban areas. As a result of loan regulations, the sales and move-in market indices are declining not only in provincial areas but also in the metropolitan area.

According to the Korea Housing Industry Research Institute (KHIRI) on the 2nd, the nationwide Housing Business Survey Index (HBSI) outlook for this month is 77.4, down 13.0 points from last month's outlook of 90.4. The HBSI is an indicator compiled by surveying construction companies on their housing business outlook. A figure above the baseline of 100 indicates a positive market outlook.

Previously, the HBSI actual performance for last month was 84.7, 5.7 points lower than the outlook. With this month’s outlook dropping significantly compared to the previous month, negative expectations for the housing business market are growing. The HBSI actual figures have been declining for six months after peaking at 97.6 in May. In July, it fell to the 80s at 88.3, and last month it dropped further to 83.3.

In particular, negative outlooks continued in provincial regions such as Sejong (71.4), Daegu (67.8), and Jeju (73.3), resulting in a low nationwide index. In contrast, Seoul’s figure rose by 0.6 points from 94.7 last month to 95.3.

Concerns are also growing that conditions in the move-in market will worsen. Last month, the nationwide Housing Occupancy Survey Index (HOSI) outlook was 84.0, down 1.1 points from the previous month’s actual figure. This is interpreted as a result of government loan regulation tightening, making it difficult for buyers to prepare final payments, thereby lowering occupancy rates. HOSI is an indicator that comprehensively assesses the move-in conditions of apartment complexes about to be occupied or currently occupied, as judged by housing suppliers. Similarly, after peaking at 101.2 in May, it has remained in the 80s since August.

The sales market outlook is also pessimistic. Last month’s Housing Sales Survey Index (HSSI) outlook recorded 79.4, 5.6 points lower than the previous month. By region, Jeju (64.2), Gangwon (66.6), Daegu (68.1), and Gwangju (68.7) showed the lowest figures. A KHIRI official said, “Expectations are concentrated on the metropolitan area sales market, widening the gap with provincial metropolitan cities and other provinces,” adding, “It is necessary to prepare detailed supply-demand diagnoses, market monitoring, and business diversification plans to respond to future market changes.”