'2024 KB Real Estate Report' Released
"Supply and Interest Rates, Key Variables in This Year's Housing Market"
Real estate experts forecast that housing sale prices will continue to decline this year. Last year, nationwide housing sale prices fell by 4.6%, marking the largest drop since the 1998 Asian financial crisis (-12.4%).
According to the '2024 KB Real Estate Report' released on the 3rd by KB Financial Group Management Research Institute, 74% of market experts and 79% each of licensed real estate agents and asset management specialists (PBs) predicted a decline in housing sale prices this year. The survey was conducted among 172 experts, 523 KB-affiliated licensed real estate agents, and 73 KB PBs.
Regarding the extent of the decline, most experts and real estate agents expected a 1-3% drop, while a higher proportion of PBs anticipated a 3-5% decrease. The sluggish housing sales market is expected to persist this year as well. Seventy-one percent of experts forecast that the market will remain at levels similar to those of 2022-2023. Both experts (50%) and real estate agents (59%) most commonly believed that this year would mark the lowest point in the housing sales market cycle.
Regarding regions expected to have favorable housing market conditions this year, most experts pointed to Seoul and Gyeonggi areas. Daegu was identified as the region with the greatest concern for housing market downturn. Daegu was ranked as the top area of concern for a second consecutive year due to issues such as oversupply, increasing unsold units, and problems with real estate project financing (PF).
Regarding jeonse (long-term lease) prices, 53% of experts and 61% of real estate agents forecast a decline. Most expected the decrease to be less than 3%. Compared to last year’s survey results, the outlook for price declines has significantly lessened, and many believe the drop will not be as large as last year. Meanwhile, 47% of experts and 39% of real estate agents anticipated jeonse prices to rise. This reflects the impact of increased jeonse demand amid the ongoing sluggish sales market.
Experts identified apartment pre-sales, newly built apartments, and reconstruction projects as promising real estate investments this year. However, given the continued uncertainty in the real estate market and significantly weakened buyer sentiment, polarization is expected to deepen even within apartment pre-sales and new apartments, between assets with relatively good locations and facilities and those without.
High-net-worth individuals’ preferred investment assets were deposits (29%), bonds (24%), and real estate (23%) in that order. Since the 2017 survey, real estate had been the most favored investment asset among wealthy individuals, but last year, as the real estate market contracted and high interest rates persisted, its preference significantly declined.
The main variables for the housing market this year are 'supply and interest rates.' Dr. Kang Min-seok of the research institute stated, "Since last year, the issue of reduced housing supply has newly emerged, increasing uncertainty in the real estate market," adding, "The timing and extent of base rate cuts and housing supply will be major factors influencing the real estate market this year."
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