"Seoul Apartment Pre-Sales Revive"... Demand Concentrates in Core Areas [Real Estate AtoZ]

Intensified Selection in the Metropolitan Area Due to Loan Regulations
Ulsan Index Surges on Expectations of MASGA Project Benefits

A recent survey indicates that the apartment pre-sale market is expected to improve this month, as demand grows and competition for subscriptions intensifies, particularly in Seoul.

The Housing Industry Research Institute announced on September 9 that, based on a survey of housing developers, the nationwide average apartment pre-sale outlook index for September was calculated at 75.6, up 0.5 points from the previous month.

This index, which ranges from 0.0 to 200.0, is a quantified indicator based on the Housing Industry Research Institute's survey of conditions at apartment complexes that are about to be or are currently being pre-sold. A reading above 100.0 indicates a positive outlook for pre-sales, while a reading below 100.0 indicates the opposite.

For the Seoul metropolitan area, the index is projected to be 79.4, down 2.0 points. However, Seoul itself is expected to see an increase of 8.6 points to 97.2, while Gyeonggi Province is projected to rise by 0.6 points to 79.4. In contrast, Incheon recorded a decrease of 15.4 points, falling to 61.5.

The Housing Industry Research Institute stated, "Within the metropolitan area, Seoul's pre-sale market is expected to perform relatively better than Gyeonggi and Incheon," adding, "As housing purchase demand has weakened due to regulations on housing mortgage loans in the metropolitan area, the market has become more selective."

The institute further commented, "In the outskirts of the metropolitan area, where location competitiveness is lower, concerns about unsold units are growing due to persistently high pre-sale prices and interest rate burdens. In contrast, in core areas of Seoul where supply is limited, demand with ample liquidity is concentrating, leading to higher subscription competition."

The outlook index for regions outside the metropolitan area is also projected to rise by 1.1 points to 74.8. Ulsan, expected to benefit from the MASGA (Make American Shipbuilding Great Again) project aimed at strengthening Korea-US shipbuilding cooperation, saw a significant increase of 33.8 points to 107.1. Chungbuk is expected to rise by 16.7 points, Daejeon by 14.7 points, North Gyeongsang Province by 9.6 points, South Gyeongsang Province by 1.9 points, and Daegu by 1.5 points.

On the other hand, Gwangju is projected to decrease by 22.0 points to 64.7, and Busan is also expected to fall by 15.0 points. Jeonbuk is forecast to drop by 9.1 points, Gangwon by 6.7 points, Jeonnam by 4.4 points, and Sejong by 3.6 points.

The Housing Industry Research Institute explained, "In non-metropolitan areas, due to the impact of the June 27 real estate measures, the apartment sales price index has declined for 20 consecutive months, affecting the pre-sale market and showing little sign of recovery. However, since the government has announced plans to boost construction investment centered on local areas to revitalize the sluggish construction market outside the metropolitan area, it remains to be seen how much impact these policies will have."

Meanwhile, the pre-sale price outlook index for this month is projected to rise by 4.5 points. The institute explained, "This appears to be due to recent instability in raw material prices, as well as concerns among developers about construction delays and actual labor cost increases following the passage of the Yellow Envelope Act and stricter industrial accident penalties."

The pre-sale supply outlook index is expected to increase by 11.8 points, while the unsold inventory outlook index is projected to decrease by 3.1 points.