Amid Fallout from Tax Reform Plan, Seoul Housing-Buying Sentiment Declines for First Time in Five Months

[Financial News] Seoul’s housing-buying sentiment fell 7.4 percentage points from the previous month, returning to a downward trend for the first time in five months amid policy changes, including the government’s announcement of a tax reform plan.
According to the “August Real Estate Market Consumer Sentiment Survey” released by the Korea Research Institute for Human Settlements on the 16th, the nationwide housing sales consumer sentiment index stood at 115.1 last month, down 1.0 point from July. It nevertheless remained in the rising range.
The real estate consumer sentiment index is an indicator that quantifies changes in consumer behavior and awareness on a scale of 0 to 200, based on surveys of real estate agencies and ordinary households. A reading below 95 indicates a declining range, 95 to below 115 indicates a neutral range, and 115 or higher indicates a rising range.
Seoul’s housing sales consumer sentiment index, which reacted particularly sensitively to the government’s tax reform plan, fell sharply by 7.4 percentage points from 139.9 to 132.5. In Seoul, the index had risen steadily from 117.8 in March, climbing through 135.6 and 138.0 to reach 139.9 over four consecutive months. Although the upward trend was interrupted this time, the index remained in the rising range, moving from Level 2—135 or higher and below 175—to Level 1—115 or higher and below 135.
More specifically, the most notable development was that Jung-gu, where many companies are concentrated, Gangnam-gu, which has many high-priced homes, and Yongsan District moved from the rising range into the neutral range. In the Gangnam area, the government’s tax reforms are expected to increase the tax burden.
The housing sales sentiment index for the Capital Metropolitan Area as a whole also declined. It stood at 125.6 last month, down 2.9 points from 128.5 the previous month. Incheon Metropolitan City fell 0.5 points from 114.0 to 113.5, while Gyeonggi Province declined 0.9 points from 125.1 to 124.2.
Outside the Capital Metropolitan Area, increases and decreases were mixed. Sejong City, where the relocation of a second group of public institutions was confirmed, rose 11.4 points from 101.5 to 112.9, while Gyeongsangbuk-do gained 6.3 points. By contrast, Gangwon State and Gwangju each fell 9.1 points.
Meanwhile, the nationwide jeonse-market consumer sentiment index rose 0.8 points from 112.7 the previous month to 113.5, remaining in the neutral range.
Seoul’s jeonse sentiment fell 1.1 points from 121.8 to 120.7, while Gyeonggi Province rose from 117.4 to 118.9 and Incheon Metropolitan City increased from 113.4 to 114.7.
The nationwide land-market consumer sentiment index stood at 79.6, down 1.3 points from 80.9 the previous month, remaining in the declining range.

[email protected] Jung Kyung-soo Reporter