iM Securities on the 16th assessed that, in connection with the "10·15 real estate measures," the high-intensity lending curbs are negative for builders, with sales transaction volume declining and redevelopment projects being delayed.
Bae Se-ho, an analyst at iM Securities, said, "The expansion of regulated zones is negative for builders," and noted, "The likelihood of being subject to the price ceiling on presales increases, and the pace of redevelopment projects may slow."
If an area is designated a speculative overheating district, the price ceiling on presales can also apply to private residential land. In Seoul, more than 80% of presale supply comes through redevelopment projects, and applying the price ceiling can undermine union members' project profitability, which could significantly slow project progress, the explanation went.
A decline in the profitability of redevelopment projects can reduce builders' redevelopment orders and groundbreakings, according to analyst Bae's assessment. As of September this year, the nationwide cumulative presale volume was 140,000 units, down 16% from a year earlier. The real estate market in the provinces remains very sluggish, and the pace of redevelopment projects in the Seoul metropolitan area is also very slow.
Bae said, "Seoul's sales transaction volume will shrink significantly," adding, "This round of regulations may temper the upward trend in sales prices in the short term, but the medium- to long-term trajectory needs time to confirm. Price-rising factors such as the upward trend in monthly rents and a shortage of move-in supply in Seoul remain valid."
Earlier, the government announced strong lending curbs on 15th. The centerpiece is to expand the regulated zones to all of Seoul's districts (25 districts) to sharply reduce loan limits, and to designate the areas as land transaction permit zones to restrict so-called "gap investment."