Seoul Housing Market Outlook Rebounds After 7 Months... Impact of Toheoje and Interest Rate Cuts

Nationwide Index Up 3.4 Points from Previous Month
Growing Expectations for Recovery in Housing Sales Sentiment

The business outlook for housing developers in Seoul has rebounded for the first time in seven months.

According to the March Housing Business Outlook Index from the Korea Housing Industry Research Institute on the 13th, this month’s housing business outlook index for Seoul recorded 79.0, up 3.4 points (p) from the previous month.

Apartment buildings in downtown Seoul. Photo by Yonhap News

The nationwide index rose 0.8 points to 74.0 compared to the previous month. An index below 100 indicates that more developers have a pessimistic outlook on the market.

The metropolitan area rose 0.9 points to 65.4. Gyeonggi Province showed an upward trend (58.8→60.5), but Incheon declined (59.2→56.6).

The Korea Housing Industry Research Institute analyzed, "The interest rate cut and the lifting of land transaction permit zones in the three Gangnam districts last month appear to have positively influenced developers’ sentiment." On the other hand, Incheon’s prolonged housing market slump is interpreted as having a negative impact on the business outlook.

Non-metropolitan areas saw the index rise centered on metropolitan cities, with a 0.8-point increase to 75.9. Metropolitan cities were projected to rise 4.8 points to 73.0, and by region, Daejeon (66.6→94.1) showed the largest increase. Rural areas recorded a 2.3-point decline to 78.0. Chungnam (77.7→92.8), Gyeongnam (71.4→75.0), and Chungbuk (87.5→88.8) followed in order of increase.

The Korea Housing Industry Research Institute explained, "Daejeon’s selection as a lead project for railroad undergrounding seems to have reflected expectations for revitalizing the local business climate," adding, "Jeonbuk and Gwangju were negatively affected by decreases in housing sales, apartment price declines, and reductions in housing starts."

The financing index was recorded at 72.3, up 3.1 points from the previous month. This is interpreted as a positive effect from the interest rate cut and the easing of mortgage loan regulations for multi-homeowners, which helped recover housing sales sentiment.

The material supply index rose 0.7 points to 96.7. Despite expectations of a significant decrease in housing starts this year compared to last year, the main factor is considered to be the surplus of materials stockpiled from imports last year.