"This Year’s House Prices Will Fall Compared to Last Year... Funding Inflows Expected to Be Difficult"

Korea Research Institute of Land and Housing, etc.
'Relay Seminar for Addressing Current Issues in the Real Estate Market'

Seonghwan Kim, Associate Research Fellow at the Korea Construction Industry Research Institute

It is forecasted that housing prices nationwide will decline by 2% this year compared to last year. This is based on the fact that stricter bank loan regulations, a trend of interest rate hikes, and a sluggish real estate economy make additional capital inflow difficult.

On the 7th, the Korea Research Institute for Human Settlements held a 'Relay Seminar for Responding to Real Estate Market Issues' at the Seoul Construction Hall in collaboration with the Korea Construction Industry Research Institute, the Korea Construction Policy Research Institute, and the Korea Real Estate Development Association. Kim Seonghwan, Associate Research Fellow at the Korea Construction Industry Research Institute, delivered a presentation titled '2024 Real Estate Market Trends and Outlook.'

Associate Research Fellow Kim said, "While banks are tightening their lending stance, the timing of interest rate cuts may be delayed compared to market expectations, making it realistically difficult for additional capital to flow into the real estate market," and predicted, "Housing prices will fall compared to last year."

He added, "Although price increases spread in the second half of last year, a downward trend resumed after October, with the decline expected to widen until the end of the year," and said, "Due to political events in the first half of this year and the time required for the downturn to take hold, a relatively high-low trend is expected."

He forecasted that annual housing sale prices will fall by 1% in the metropolitan area and 2% nationwide this year. Jeonse prices are expected to rise by 2% nationwide. This is based on the expectation that as buying demand decreases, jeonse demand will increase.

He also pointed out that costs surrounding the new housing market have risen. Associate Research Fellow Kim said, "All costs, including project financing, labor costs, material costs, and safety management costs, are increasing," and warned, "Even if supply is activated, there is a risk of a gap between the housing prices expected by the market and actual prices."

Kim Ji-hye, Associate Research Fellow at the Korea Research Institute for Human Settlements, who presented on 'Housing Supply Plans and Current Housing Supply Status,' emphasized, "The permit performance reached 82.7% compared to the planned volume of 470,000 households nationwide in 2023," and added, "Especially in the metropolitan area, the achievement rate of the planned volume (260,000 households) was only 69%, highlighting the need for policy support to restore supply in Seoul and the metropolitan area."

She continued, "In addition to resolving disputes to shorten project periods, improvements in the housing supply foundation such as supporting the growth of construction companies and monitoring real estate project financing (PF) are necessary."