6 out of 10 Licensed Realtors Say "House Prices Will Fall in the Second Half of the Year"... The Variable Is Interest Rates

Survey of 2,338 Real Estate Agencies... 57.6% Predict Decline
Incheon and Daegu at 70% Range... Jeju Sees 27.9% Forecasting Increase

Apartment view around Seoul./Photo by Jinhyung Kang aymsdream@

[Asia Economy Reporter Ryu Tae-min] As concerns over consecutive base rate hikes and economic recession grow, six out of ten real estate agencies nationwide predicted that house prices will decline in the second half of this year. In particular, in Incheon and Daegu, the outlook that house prices will continue to fall was dominant.

According to a survey conducted on 2,338 real estate agencies by the Korea Research Institute for Human Settlements on the 3rd, 57.6% of respondents (4.2% expecting a sharp decline, 53.4% expecting a slight decline) forecasted that house prices in the second half of the year will fall compared to the first half. Among them, only 9.3% expected house prices to rise in the second half.

The regions with the highest proportion of respondents expecting house prices to fall in the second half were Incheon (76.6%) and Daegu (73.3%). In particular, Daegu had the highest percentage nationwide of respondents expecting a sharp decline at 13.6%. The proportion of respondents expecting housing prices to rise in these areas was only 4.6% and 0.3%, respectively.

In the metropolitan area, Seoul (54.7%) and Gyeonggi (61.9%) also had more than half of respondents forecasting a decline. Similarly, the outlook for rising house prices in these areas was limited to 11.0% and 8.4%, respectively, showing a dominant expectation of decline.

Jeju Island showed a different pattern. The outlook for rising prices was 27.9%, 7.5 percentage points higher than the decline forecast (20.4%). However, the dominant expectation was that prices would remain stable in the second half, at 51.7%.

A survey conducted on 6,680 general actual demand households also showed a dominant expectation of decline. 36.0% of respondents (1.5% expecting a sharp decline, 34.5% expecting a slight decline) anticipated a fall in house prices in the second half. In particular, regions such as Sejong (53.3%), Daejeon (55.2%), Daegu (46.6%), and Incheon (44.0%) had many respondents expecting a decline.

On the other hand, 23.7% of respondents expected house prices to rise in the second half, with 0.8% expecting a sharp rise and 22.9% expecting a slight rise. Especially in Jeju, the outlook for rising prices was 33.1%, more than twice the decline forecast (16.8%).

Both real estate agents (60.8%) and general actual demanders (49.2%) cited interest rates as the main variable in the housing market in the second half. Next, real estate agents pointed to loan regulations (17.4%), other factors (5.5%), and capital gains tax (5.5%), while general actual demanders cited other factors (15.6%), loan regulations (13.3%), and development prospects (9.6%) in that order.