[Real Estate Wealth Briefing] Green Light for Recovery of Buyer Sentiment in Seoul Housing Market in Second Half

"Will It Rise? Or Fall?" Leading Indicators to Gauge Housing Prices in the Second Half

KB Leading Apartment 50 Index
KB Real Estate Sales Price Outlook Index
Housing Price Uptrend Spreads to the Seoul Metropolitan Area

Decline in Provinces, Clear Differences in Housing Price Outlook
Polarization Deepens Among Regions Within the Seoul Metropolitan Area
Careful Examination of Regional Leading Indicators Needed

Jong-A Lee, Head of KB Real Estate Big Data Center, KB Kookmin Bank

July is just around the corner. As we enter the second half of the year, various news about economic outlooks are pouring in. Since the beginning of the year, experts have been divided on whether the housing market will continue its prolonged slump or show signs of recovery. Due to the bleak external macroeconomic environment, there were not many opinions forecasting a rebound. However, the atmosphere has noticeably changed since the recent release of housing transaction volumes.

According to the Seoul Real Estate Information Plaza on the 25th, the number of apartment sales transactions in Seoul rose from 2,610 in January and 2,569 in February to 4,227 in March, 4,372 in April, and 4,608 in May, surpassing 4,000 transactions monthly since March. Apartment prices in Seoul are also on the rise.

According to the weekly KB Apartment Market Trends released by the KB Real Estate Big Data Center, the Seoul apartment sales price change rate turned positive at 0.01% on May 20. As of June 17, it rose by 0.07%, marking five consecutive weeks of price increases. With buying sentiment reviving mainly in Seoul and prices rising, the upward trend is spreading to the greater metropolitan area.

Will this upward trend continue into the second half of this year? Looking at leading indicators, it can be said that a green light has been turned on for the Seoul housing market. The KB Leading Apartment 50 Index has been trending upward since the beginning of this year.

The average apartment price in Seoul has risen for three consecutive months since recording 93.6 in March. This index is a measure of price trends for the top 50 apartment complexes nationwide with the highest total market value. It tends to quickly reflect prices of complexes that are highly preferred and have many transactions, making it a leading indicator for the apartment market.

Next, let’s examine another leading indicator, the ‘KB Real Estate Sales Price Outlook Index.’ This index is based on a survey conducted by KB Real Estate of over 6,000 licensed real estate agencies nationwide regarding their outlook on local housing prices. An index above 100 indicates a higher proportion of respondents expect prices to rise.

The sales price outlook index for Seoul in May rose 3.6 points from the previous month to 102.1. This is the first time in eight months since September last year (106.5) that Seoul’s sales price outlook index has exceeded the baseline of 100.

However, the situation is somewhat different in other regions. According to KB Real Estate, as of June 17, the nationwide apartment sales prices showed a negative change rate of -0.01% compared to the previous week. The decline was more pronounced in Daegu (-0.14%), Jeju (-0.10%), and Gwangju (-0.08%).

The temperature gap in housing price outlooks is also clear. Since October last year, the sales price outlook indices for the five metropolitan cities and other provinces have fallen below the baseline of 100. As of May, they recorded 86.4 and 89.6, respectively.

With variables such as signs of economic recovery and potential interest rate cuts remaining in the second half of the year, polarization between Seoul and other regions, as well as within the metropolitan area, is intensifying. If you are planning to purchase a home, it is advisable to carefully consider the overall conditions along with regional leading indicators and prepare accordingly.