Unsold Apartments in November Expected to Be Highest This Year... "Worsening Possible if Sales Schedules Cluster"

Housing Industry Research Institute, November Apartment Sales Outlook Index

Source=Korea Housing Institute

[Asia Economy Reporter Hwang Seoyul] The unsold housing inventory this month is expected to be the highest so far this year. Although the nationwide apartment sales outlook index is expected to improve compared to the previous month, the absolute value of the index remains at a low level.

According to the Korea Housing Industry Research Institute (hereafter KHIRI) on the 9th, the unsold inventory index for November was recorded at 131.4, the highest figure this year. The sales price outlook for this month fell by 9.1 points from the previous month to 86.3, and the sales volume dropped by 12.8 points to 70.8, marking the lowest levels this year.

KHIRI analyzed that buyer sentiment has weakened due to the big-step increase in the base interest rate, and the attitude of sales-related businesses has also become conservative. They suggested that if the sales schedules postponed due to the real estate market downturn become concentrated, the outlook for unsold inventory could increase further, indicating the need for related policies.

November Apartment Sales Outlook Index / Data provided by Korea Housing Industry Institute

The apartment sales outlook index for November is expected to rise by 7.5 points from the previous month to 44.6. However, despite the recovery in the index, it remains at a very low level as the average does not exceed 50.

Most regions nationwide, except for the Seoul metropolitan area and Sejong, such as Gangwon (23.0), Daegu (21.2), Chungbuk (15.9), and Gyeongbuk (17.1), are expected to see index recovery. KHIRI analyzed that "this reflects expectations for the lifting of regulatory designations in non-metropolitan areas."

The Seoul metropolitan area (36.8) is forecasted to be 6.6 points lower than last month. Seoul recorded 51.2, Gyeonggi 29.5, and Incheon 29.6, each expected to decrease by 2.5 points, 9.0 points, and 8.3 points respectively compared to the previous month. Sejong (33.3) is expected to drop by 9.6 points, with KHIRI attributing this to the impact of remaining regulatory policies in parts of the metropolitan area and Sejong on the index.

KHIRI stated, "This month's index exceeded 30 in all regions except Incheon and Gyeonggi, but this appears to be a rebound from the downward trend in forecasts over the past six months. Since the likelihood of continued interest rate hikes until the first half of next year is high, concerns remain about the impact on the construction industry and financial sector due to the backlog of unsold and unoccupied units. Therefore, proactive measures such as deregulation, tax reform, and public financial support are necessary."