"Rising Home Prices Spread to Outer Seoul Metropolitan Areas"...Apartment Sales Outlook Index Climbs

Nationwide Index Up 17.7P
Seoul Rises 14.8P... Incheon Sees a Higher Gain of 17.9P
"Housing Price Increases Expected to Have a Positive Impact on the Presales Market"

View of apartment buildings in Seoul. Yonhap News

As housing prices continue to rise mainly in the Seoul metropolitan area, the Apartment Sales Outlook Index has increased.

The Housing Industry Research Institute (HIRI) announced on the 5th that, based on a survey of housing project developers, the nationwide Apartment Sales Outlook Index for February stood at 98.1, up 17.7 points from the previous month. The Sales Outlook Index is an indicator that quantifies the business conditions of complexes that are about to be put on the market or are currently on sale, based on a survey of housing project developers. A reading above 100 means the sales outlook is positive, while a reading below 100 indicates the opposite.

For the Seoul metropolitan area, the index was projected to be 104.8, up 15.6 points, while non-metropolitan areas were forecast at 96.6, up 18.0 points. Within the metropolitan area, Seoul was found to be 111.9, an increase of 14.8 points. Incheon rose 17.9 points to 100.0, higher than Seoul in terms of the increase, and Gyeonggi Province climbed 14.4 points to 102.6.

HIRI explained, "While the upward trend in housing prices in the Seoul metropolitan area continues, the phenomenon of supply drying up in key areas and rising Jeonse prices have expanded the upward trajectory of housing prices to the outer metropolitan areas," adding, "This has reflected expectations that these factors will have a positive impact on the presales market."

HIRI went on to say, "However, it remains to be seen what impact the government's recent strong commitment to imposing heavier capital gains taxes on multiple-home owners will have on the market," and added, "The end of the temporary relief from heavier capital gains taxation on multiple-home owners could intensify the so-called preference for 'one smart home,' raising concerns that polarization in the real estate market will deepen."

Among non-metropolitan regions, South Jeolla Province was recorded at 92.3, up 32.3 points. Sejong also rose by 28.5 points, Gangwon Province by 28.1 points, Jeju by 25.9 points, and Gwangju by 23.6 points.

HIRI stated, "The sharp increase in the sales market outlook nationwide appears to be due to a balloon effect centered on the outer metropolitan area and major provincial metropolitan cities, caused by strict lending regulations in certain parts of Seoul and Gyeonggi Province, combined with a decrease in housing starts, which has heightened public interest in new presale offerings."

HIRI added, "The 'January 29 Supply Measures,' which utilize idle land within urban areas of the Seoul metropolitan region, were recently announced, and the plan to supply 60,000 homes within the metropolitan area is evaluated as having a positive impact on stabilizing the regional real estate market." However, it also noted, "Since construction is scheduled to begin after 2028 for most of these complexes, the short-term ripple effect on the market is not expected to be significant."

Meanwhile, this month's Sales Price Outlook Index came in at 109.7, down 4.6 points from the previous month, while the Sales Volume Outlook Index was tallied at 98.6, up 6.4 points.

The Sales Price Outlook Index still exceeds the baseline of 100, indicating that expectations for price increases remain dominant. However, as the slump in the construction industry continues over the long term and housing starts decrease, demand for construction raw materials is expected to decline, leading to a slight slowdown in the upward trend of presale prices. In addition, the outlook for presale volume reflects expectations that, as housing prices continue to rise and sales conditions improve, presale supply will increase.