Housing Business 'Cools Down' Amid 10·15 Regulations... "Contraction in Seoul Metropolitan Transactions Spreads to Provinces" [Real Estate AtoZ]

November Housing Business Sentiment Index Drops by 20.7 Points
Seoul Metropolitan Area Plunges 31.0 Points: Seoul, Gyeonggi, Incheon in Order
Non-Metropolitan Outlook Down by 18.5 Points
"Metropolitan Market Contraction Negatively Impacts Non-Metropolitan Regions"

Due to the 10·15 measures, buying sentiment has weakened, leading to a significant drop in the Housing Business Sentiment Index for November.

According to the Housing Industry Research Institute (HIRI) on November 13, the Housing Business Sentiment Index for November, based on a survey of housing businesses, was recorded at 65.9, down 20.7 points from the previous month. When this index exceeds the baseline of 100, it indicates that a higher proportion of companies expect the housing business to improve.

The decline was particularly pronounced in the Seoul metropolitan area, which recorded 64.1, down 31.0 points. Seoul saw the largest drop, falling by 35.1 points to 71.7. Gyeonggi Province followed, dropping 32.0 points to 62.8, while Incheon fell 26.2 points to 57.6.

HIRI explained, "As all of Seoul and 12 areas in Gyeonggi Province have been newly designated as adjustment target areas, speculative overheating zones, and land transaction permit zones, buying sentiment across the Seoul metropolitan area has rapidly weakened." The institute added, "After the announcement of the measures, the increase in apartment prices in Seoul has slowed, and major areas in Gyeonggi Province that were designated as regulated zones, such as Bundang, Gwacheon, and Gwangmyeong, have also seen their upward trends diminish, causing the market to shift to a wait-and-see mode." HIRI further noted, "Just before the implementation of the regulations, there was a short-term surge in demand as buyers rushed to purchase, but transaction volume dropped sharply after the measures took effect."

In non-metropolitan areas, the index was projected to fall by 18.5 points to 66.3. Among major metropolitan cities, Ulsan dropped 28.6 points to 76.9, Daejeon fell 21.9 points to 71.4, and Busan declined 20.7 points to 65.0. Gwangju, on the other hand, rose by 2.3 points to 80.0.

All provincial regions experienced declines: Gangwon dropped 44.4 points, North Chungcheong 27.5 points, North Jeolla 25.0 points, Jeju 23.9 points, and South Jeolla 14.5 points.

HIRI stated, "Concerns about a slowdown in the real estate market are spreading to regional areas," adding, "The contraction in transactions in the Seoul metropolitan area appears to have had a negative impact on the outlook for the housing market in non-metropolitan regions as well."

The institute continued, "However, in the actual market, somewhat contrasting trends are observed. In local housing markets that are not affected by the regulations, signs of recovery are emerging, particularly in major metropolitan cities such as Busan and Ulsan." HIRI added, "In fact, apartment prices in Busan, which had been on a downward trend for an extended period, have recently started to rise again, with some popular areas such as Haeundae and Suyeong Districts showing signs of a rebound."

Meanwhile, the nationwide capital procurement index for November was projected to fall by 13.1 points to 73.4, while the materials supply index was expected to rise by 3.2 points to 96.6 compared to the previous month.

HIRI noted, "Uncertainty is increasing across the housing supply and pre-sale markets, as redevelopment projects are delayed and the subscription market in the Seoul metropolitan area is also contracting due to tightened lending regulations." However, the institute added, "The materials supply index saw a slight increase, which appears to be due to the stabilization of construction material prices."