March Housing Market: "One Smart Home" VS. "Resolving Unsold Units"

This month, the apartment sales market is expected to see a deepening polarization between Seoul, Gyeonggi, and other regions. While a "smart one-home" craze is sweeping Seoul, it is anticipated that local areas will continue to focus all efforts on resolving unsold inventory.

The Korea Research Institute for Human Settlements (KRHS) announced on the 6th that, based on a survey of housing developers, the nationwide average apartment sales outlook index for this month was recorded at 72.9, down 2.5 points from the previous month.

The metropolitan area fell by 3.2 points to 73.4, and non-metropolitan areas dropped by 2.3 points to 72.8. However, looking at the details, the outlook diverged between Seoul/Gyeonggi and other regions. Incheon recorded a 11.5-point decline to 64.5, while Seoul fell by 1.4 points to 85.7, and Gyeonggi rose by 3.3 points to 70.0.

In non-metropolitan areas, increases were expected in Daejeon by 20.3 points, Gyeongnam by 7.3 points, Chungbuk by 2.7 points, Jeju by 2.4 points, and Chungnam by 2.2 points. However, declines were predicted in Jeonbuk by 17.5 points, Busan by 12.6 points, Jeonnam by 10.7 points, Gangwon by 8.4 points, Ulsan by 8.1 points, Daegu by 5.4 points, Sejong by 1.9 points, Gyeongbuk by 1.8 points, and Gwangju by 1.1 points. The rise in Daejeon is interpreted as reflecting expectations due to new apartment sales occurring for the first time in three months.

KRHS explained, "The significant divergence in sales outlook between Seoul/Gyeonggi and non-metropolitan areas is due to the ongoing tax and financial regulations that have led multi-homeowners to liquidate their real estate holdings and concentrate on owning a single high-value prime property, a phenomenon known as 'smart one-home.' Coupled with political uncertainty and economic recession, the nationwide volume of problematic unsold apartments has reached its highest level in 11 years, with 80% concentrated in non-metropolitan areas, reflecting a negative market environment in the sales outlook."

They added, "The government is purchasing 3,000 unsold houses in local areas through the Korea Land and Housing Corporation (LH), and is promoting rapid expansion of social overhead capital (SOC) investment and the introduction of corporate restructuring (CR) real estate investment trusts (REITs). However, due to strong loan regulations, the effects are expected to be limited."

Meanwhile, the sales price outlook index for this month was forecasted at 102.9, down 3.0 points from the previous month. This is understood to be due to a decrease in apartment construction starts amid a downturn in the construction industry, leading to reduced demand for construction materials and labor.

The sales volume outlook index is expected to fall by 3.4 points, while the unsold inventory outlook index is projected to rise by 0.8 points. KRHS stated, "Recently, with project financing (PF) and bridge loans being blocked, construction starts and sales have decreased. Combined with the economic downturn and loan regulations causing demand reduction, construction companies are deciding to postpone or reduce sales schedules." They added, "Strong loan regulations, recession concerns, and unstable political situations are acting in combination to suppress buyers' purchasing sentiment, leading to a wait-and-see stance until the market stabilizes."