Has the October 15 Measures Lost Their Effect?... Housing Business Outlook Rebounds in Just One Month

December Housing Business Sentiment Index Up 8.8 Points
Greater Seoul Area Rises 20.4 Points from Previous Month
Sales Prices Increase in Major Redevelopment Complexes

The business outlook for housing developers, which had declined after the October 15 measures that designated all of Seoul as a speculative zone, showed signs of recovery within a month.

The Housing Industry Research Institute (HIRI) announced on December 16 that the Housing Business Sentiment Index for December, based on a survey of housing developers, recorded 74.7, an increase of 8.8 points from the previous month.

This index indicates that if it exceeds the baseline of 100, a higher proportion of companies expect the housing business market to improve.

The greater Seoul area recorded 84.5, up 20.4 points from the previous month. Seoul rose by 23.3 points to 95.0, Gyeonggi Province by 16.6 points to 79.4, and Incheon by 21.7 points to 79.3, respectively.

HIRI explained, "Although transaction volumes have not yet shown a clear recovery due to strict loan regulations, the designation of regulated areas, and the implementation of the land transaction permit system, business sentiment has improved as sales prices have increased, particularly in major redevelopment complexes in Seoul and popular districts such as Songpa, Dongjak, and Yeongdeungpo."

The institute added that the so-called “balloon effect” also appeared in some non-regulated areas of Incheon and Gyeonggi Province, contributing to the rise in the index. The index for non-capital regions was projected at 72.5, up 6.2 points.

HIRI analyzed, "After the designation of regulated areas in the greater Seoul area under the October 15 measures, some of the demand shifted to major provincial cities, resulting in differentiated recovery strength by region, which also contributed to the improvement in the index."

This month, the nationwide funding index was projected at 68.8, down 4.6 points from the previous month. The materials supply index recorded 94.6, a decrease of 2.0 points.

The decline in the funding index is attributed to deteriorating funding conditions due to concerns over real estate project financing insolvency and an increase in loan delinquencies. The drop in the materials supply index is analyzed as a result of the recent sharp rise in the won-dollar exchange rate, which has exceeded the 1,470 won level, thereby increasing the burden of imported material costs.