Housing Market Conditions Worsen for Four Consecutive Months... "Prolonged Period of Slump Expected"

Jusan-yeon, 'August Housing Business Sentiment Index'

Housing Business Sentiment Index Trend for August / Data provided by Housing Industry Research Institute

[Asia Economy Reporter Hwang Seoyul] The housing business outlook index has been declining for four consecutive months. With overlapping negative factors such as worsening pre-sale market conditions and soaring raw material prices affecting the entire construction industry, the housing market downturn is expected to continue.

According to the "August Housing Business Outlook Index" released by the Korea Housing Institute (hereafter KHI) on the 18th, the nationwide outlook index for this month was 49.3, down 11.1 points from July's 60.4, marking a decline for four consecutive months.

The Housing Business Outlook Index is calculated monthly by surveying housing business operators about their business performance and outlook. It is a supply market indicator that comprehensively assesses the housing business from the supplier's perspective. The survey targets members of the Korea Housing Association and the Korea Housing Builders Association. The index baseline is 100, with below 85 indicating a downturn phase, 85 to less than 115 indicating a stable phase, and 115 or above indicating an upturn phase.

Specifically, the housing business outlook index for the Seoul metropolitan area fell from 71.5 last month to 50.4 this month, suggesting a continued decline in housing business conditions. Seoul (59.6), Incheon (44.4), and Gyeonggi (47.1) each dropped significantly by 12.4 points, 33.7 points, and 17.4 points, respectively.

Regions outside the metropolitan area (50.5) also showed a poor outlook, falling 21.8 points compared to the previous month. In particular, Sejong (52.9) and Chungnam (42.1), which had relatively favorable outlooks compared to other regions, experienced the largest declines of 34.6 points and 37.9 points, respectively.

KHI stated, "Due to soaring raw material prices, worsening pre-sale market conditions, and economic recession, new housing construction orders from business operators have decreased, and existing private projects have been suspended due to construction cost burdens," adding, "The housing market downturn is expected to continue for a considerable period."

The nationwide material supply index (79.7) and financing index (66.6) for August rose by 25.8 points and 7.4 points, respectively, compared to the previous month. KHI analyzed that the recovery of the material supply index was mainly due to reduced material demand caused by the housing market downturn.