Housing Business Sentiment Index in the Seoul Metropolitan Area Rises by 25.4 Points
Overheated Housing Market Spreads to Bundang and Gwacheon
"Results May Include Responses Before Loan Regulations"
"Market Trends Should Be Closely Monitored for the Time Being"
The nationwide Housing Business Sentiment Index for July showed an upward trend. The index rose sharply, particularly in the Seoul metropolitan area. However, following last month's tightening of lending regulations, housing transactions have quickly declined, and there are explanations that this could lead to changes in market conditions.
According to the Housing Industry Research Institute (HIRI) on July 15, the Housing Business Sentiment Index for July, based on a survey of housing business operators, was recorded at 100.0, up 6.5 points from the previous month. The index had previously fallen to 61.6 in January, but then reversed course and has now risen for six consecutive months. When the index exceeds the baseline of 100, it indicates that a greater proportion of companies expect the housing business environment to improve.
In particular, the Seoul metropolitan area recorded a significant increase of 25.4 points, reaching 123.7. Within the metropolitan area, Gyeonggi Province rose by 29.4 points (from 92.8 to 122.2), Seoul by 28.9 points (from 106.2 to 135.1), and Incheon by 17.9 points (from 95.8 to 113.7).
HIRI explained that the sharp rise in the metropolitan area's outlook was due to the overheating of the housing market, which began in the three Gangnam districts and spread to areas such as Bundang and Gwacheon. In addition, the implementation of the third phase of the stress-based Debt Service Ratio (DSR) regulation from this month stimulated even the so-called "last-minute demand," further boosting buying sentiment.
However, due to lending regulations such as the limitation of mortgage loans to 600 million won, the volatility of the index is expected to increase. HIRI stated, "As the threshold for securing funds has risen significantly, apartment sales transactions in Seoul have rapidly contracted," and added, "With growing uncertainty regarding the possibility of additional regulations or further market changes, there is also a tendency for buyers to temporarily postpone their home purchase decisions."
HIRI further noted, "This survey was conducted before and after the announcement of lending regulations. While the outlook index remained high, especially in the metropolitan area, it is possible that some of the responses reflect perceptions prior to the full impact of the new policies. Therefore, it is necessary to closely monitor market trends for the time being."
Outside the metropolitan area, the index rose by 2.4 points to 94.9. In major cities, it increased by 4.2 points to 98.8, and in provincial regions, it rose by 1.0 point to 91.9.
Among the major cities, Busan rose by 21.7 points (from 73.3 to 95.0), Gwangju by 8.8 points (from 80.0 to 88.8), and Daegu by 6.1 points (from 83.3 to 89.4). In contrast, Ulsan fell by 6.3 points (from 100.0 to 93.7), Sejong by 3.0 points (from 123.0 to 120.0), and Daejeon by 2.1 points (from 108.3 to 106.2).
In provincial regions, Chungbuk rose by 29.1 points (from 87.5 to 116.6), Gyeongnam by 11.2 points (from 88.8 to 100.0), and Jeonbuk by 4.0 points (from 88.8 to 92.8). Conversely, Jeonnam fell by 17.4 points (from 88.8 to 71.4), Gyeongbuk by 15.4 points (from 100.0 to 84.6), and Chungnam by 7.2 points (from 100.0 to 92.8). Gangwon remained unchanged from the previous month at 83.3.
HIRI commented, "The index for non-metropolitan areas reached 94.9, the highest level so far this year. A slight decrease in the number of unsold homes in the provinces, as well as the government's announcement of a plan to purchase 10,000 unsold pre-completion apartments in non-metropolitan areas under a repurchase agreement to boost the construction industry, contributed to the positive outlook."
Meanwhile, the nationwide funding procurement index for July rose by 12.5 points from the previous month to 82.8, and the materials supply index was projected to increase by 2.1 points to 100.0.
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