More than 90% of real estate experts predicted a decline in housing prices this year. Half of the experts expected the real estate market to recover next year.
On the 5th, KB Financial Group Management Research Institute released the results of a survey conducted among real estate experts from construction, development, academia, and finance sectors, nationwide real estate agents, and private bankers (PBs) through the 'KB Real Estate Report.'
When asked about the outlook for housing sale prices this year, 95% of experts, 96% of agents, and 92% of PBs answered that prices would "fall." Among metropolitan area agents, 35%, and experts, 26%, expected a decline of '5% or more,' while in non-metropolitan areas, the proportion expecting a drop of "5% or more" (agents 36%, experts 39%) was higher than in the metropolitan area.
Regarding the timing of a rebound in housing sale prices, 53% of agents, 45% of experts, and 47% of PBs pointed to 2024. The proportion expecting a rebound in 2025 (29%, 34%, 40% in each group) was somewhat lower than those expecting it in 2024.
As for policies needed for a soft landing of the housing market, all three groups selected easing of mortgage loan regulations, relaxation of capital gains tax surcharges on multiple homeowners, expansion of mortgage loan policy support, and support for first-time homebuyers.
Experts identified Seoul and Gyeonggi as regions likely to have a strong housing market this year, while Daegu and Incheon were pointed out as the most likely to experience contraction. Promising real estate investments were mentioned in the order of reconstruction (21%), apartment pre-sale (21%), newly built apartments within 5 years of completion (16%), and redevelopment (12%). Agents preferred newly built apartments (16%), reconstruction (15%), and apartment pre-sale (14%), while PBs favored reconstruction (22%), newly built apartments (21%), and apartment pre-sale (17%) in that order.
Additionally, the institute forecasted that the housing price adjustment phase would continue for some time but the possibility of a sharp decline was low. The institute explained, "During the financial crisis, major countries had loose loan-to-value ratios (LTV) of 70% or more (up to 100% in the US, 80-100% in the UK, around 70% in Hong Kong), but Korea maintained about 50%, preventing household insolvency or pressure on homeowners to sell."
Furthermore, "After financial regulations were strengthened following the rapid housing price surge in 2019, the average LTV of domestic households in the first quarter of 2022 was 38.8%, with 58.4% of households in the banking sector having an LTV below 40%, and only 1% exceeding 70%. Therefore, the recent rise in interest rates and loan burdens are unlikely to cause a vicious cycle leading to an increase in urgent housing sales," the institute predicted.
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