October Apartment Presale Outlook Down 4.0 Points; Decline Continues ... Seoul Rebounds

[Financial News] The nationwide outlook for apartment presales in October fell by 4.0 points, extending its downward trend. Seoul, however, managed to rebound, suggesting that sentiment toward the presale market has improved.
On the 13th, according to a survey of housing developers conducted by the Housing Industry Research Institute (Housing Industry Research Institute), the average apartment presale outlook index for October was 82.3 nationwide, down 4.0 points from September.
All regions except Seoul posted readings below the benchmark of 100, indicating low expectations for a recovery in the construction industry. This appears to reflect some weakening outside the capital region, despite improving sentiment there as home prices continued to rise.
The capital region rose 8.0 points to 92.0. Seoul led the increase, climbing 11.8 points to 105.7. Incheon posted 83.3, up 9.2 points, while Gyeonggi Province reached 86.8, up 2.9 points. Seoul’s reading exceeded the benchmark of 100 for the first time in three months, further boosting expectations.
Seoul’s rebound appears to be based on continued increases in apartment prices. Those increases are believed to have boosted developers’ expectations despite successive interest-rate hikes by the Bank of Korea. The Housing Industry Research Institute said, “With apartment prices continuing to rise in parts of the capital region outside the Han River Belt amid worsening conditions in the jeonse and monthly rental markets, sentiment among developers toward the presale market appears to have improved.”
In provincial regions, however, the outlook continued to be negative. North Gyeongsang, which saw the sharpest drop, fell 23.5 points from 100.0 to 76.5. Gangwon and South Gyeongsang also declined by 13.3 and 11.2 points, respectively, to 66.7 and 70.6. By contrast, South Jeolla and Sejong were forecast to rise, gaining 16.9 and 1.0 points to 76.9 and 93.3, respectively.
The Housing Industry Research Institute cited a backlog of unsold homes and lending restrictions as reasons for the declines in provincial regions. It said, “A backlog of unsold homes and subdued housing demand continue,” and explained, “With the added burden of financing due to lending restrictions, the outlook index appears to have fallen in both metropolitan cities and provincial areas.”
Uncertainties remain. Attention is focused on how the government’s policy measures will affect the market, including the Bank of Korea’s policy rate decision scheduled for the 22nd, the National Assembly of the Republic of Korea’s deliberation of a tax reform bill, and the announcement of new public housing sites in the capital region.
Meanwhile, the presale price outlook index rose 5.5 points from the previous month to 114.3. The presale volume outlook index was unchanged from the prior month at 97.1, while the unsold housing volume outlook index rose 2.7 points to 108.6.
The presale price outlook index appears to reflect increases in indirect construction costs and other factors from the Ministry of Land, Infrastructure and Transport. With basic construction costs raised again just two months after an irregular notice in July, expectations for higher presale prices have also strengthened amid continued upward pressure.


[email protected] Jeong Gyeong-su Reporter