September National Apartment Presale Outlook Index at 86.3...Seoul Metropolitan Area Declines for Third Straight Month

[Financial News] The outlook for the national apartment presale market remained weak in September. Seoul, Incheon Metropolitan City and Gyeonggi Province saw their indices decline for the third consecutive month since July, while presale prices and unsold inventory are expected to rise.
According to a survey of housing developers conducted by the Housing Industry Research Institute from August 19 to 28, the national apartment presale outlook index for September stood at 86.3, down 6.9 points from the previous month. As the index remained below the benchmark of 100, more developers viewed market conditions negatively.
The Seoul metropolitan area index fell 4.5 points, from 88.5 to 84.0. The index for non-metropolitan areas also dropped 7.4 points, from 94.2 to 86.8, recording a larger decline than the Seoul metropolitan area. Both regions remained below the benchmark.
In the Seoul metropolitan area, Seoul’s index fell 3.4 points, from 97.3 to 93.9. Incheon Metropolitan City declined 6.5 points, from 80.6 to 74.1, while Gyeonggi Province fell 3.6 points, from 87.5 to 83.9. All three areas remained below the benchmark for the second consecutive month and have declined month on month for three straight months since July.
The institute analyzed that rising interest rates, amid continued tighter lending regulations centered on the Seoul metropolitan area, had increased the financial burden on homebuyers seeking to secure funds. Uncertainty surrounding real estate tax reforms and concerns over high presale prices were also cited as factors that weakened developers’ expectations.
Although the market outlook weakened, the presale price outlook index rose 1.2 points from the previous month to 108.8. The increase was attributed to the prevailing view that presale prices will rise as upward pressure on construction costs, including building materials and labor, continues.
The presale volume outlook index came to 97.1, up 9.0 points. The increase was attributed to expectations that supply schedules postponed during the summer off-season would resume ahead of the peak autumn season, along with the partial impact of expanded financial support for developers included in the August 13 housing supply measures. However, the index remained below the benchmark amid concerns that tighter lending regulations and rising interest rates would weaken demand for apartment subscriptions.
The unsold inventory outlook index surged 14.9 points to 105.9. Concerns that tighter lending regulations in the Seoul metropolitan area could reduce demand for apartment subscriptions have persisted. In addition, as unsold homes continue to accumulate in regional areas and the national inventory of unsold homes has risen for three consecutive months, expectations have grown that inventory will increase further.

[email protected] Choi Ga-young Reporter