In the real estate market, it is anticipated that it will be impossible to avoid a market recession in the short term due to the aftermath of President Yoon Suk-yeol's impeachment on the 14th. At least until the Constitutional Court's ruling (within 180 days of case receipt), it is projected that demand will show a wait-and-see stance, leading to decreased transaction volume. Most experts agreed that house prices in Seoul and the metropolitan area will maintain the current slowdown trend.
According to a survey conducted by Chosun Biz on 10 real estate experts on the 16th, many viewed the real estate market in the impeachment situation as 'short-term stagnation and long-term increase.' It was emphasized that starting from the second half of next year, political uncertainty may somewhat ease, leading to concerns about rising house prices centered around Seoul and the metropolitan area due to the issue of 'supply shortage.'
◇80% of experts say 'supply policy disruption due to political uncertainty'
Eight out of ten experts forecasted that it will be inevitable to face disruption in housing supply policies driven by the current government due to the aftermath of the impeachment. With Han Duck-soo serving as acting president for a while, it is said that relevant ministries such as the Ministry of Land, Infrastructure and Transport and the Ministry of Strategy and Finance will lack the capacity to focus on real estate policy. Just looking at the 8·8 measures announced by the government in August, it contains key contents such as ▲simplification of procedures for redevelopment and reconstruction projects ▲activation of the non-apartment market ▲release of the greenbelt in Seoul, among other supply expansion plans.
Professor Kim Jin-yoo of the Department of Urban Transportation Engineering at Kyonggi University stated, "It will be difficult for the current administration's real estate policies to gain traction under the acting presidency, and all policy attention will likely be focused on the issue of impeachment, leading to a loss of momentum."
Professor Lee Chang-moo of the Department of Urban Engineering at Hanyang University explained, "Supply measures should all be pursued in the long term," adding that there should also be consideration of the possibility of a regime change, making it unlikely that proposals for easing regulations for multiple homeowners will progress smoothly.
In particular, the current situation shows signs of declining transaction volume and price slowdown due to economic instability and lending restrictions. The Bank of Korea lowered its economic growth forecast for next year to 1.9% prior to the state of emergency. Additionally, the financial authorities implemented the second stage of the debt service ratio (DSR) stress test in September, and banks raised lending rates in accordance with the authorities' stance by increasing additional charges.
Song In-ho, head of the Economic Information Center at the Korea Development Institute (KDI), noted, "With the combination of economic recession and political instability, purchasing demand will further shrink," indicating that they foresee a decline in house prices nationwide, including in Seoul.
On the other hand, some experts believe that the political uncertainty has actually decreased compared to before since the impeachment motion was passed in the National Assembly. There is an opinion that pursuing existing policies will not be problematic during the waiting period for the Constitutional Court's ruling. They also predict that supply policies being promoted at the local government level, such as in Seoul and Gyeonggi Province, will not be significantly affected.
Professor Park Hap-soo, an adjunct professor at the Graduate School of Real Estate at Konkuk University, stated, "In the short term, we should view that the first uncertainty has been resolved, although it remains unstable. While it may not be possible to pursue new policies, existing policies that have already been announced can still be pursued."
Yun Ji-hae, a senior researcher at Real Estate R114, noted, "It seems that the possibility of political uncertainty amplifying further is unlikely now," adding that the anxiety in financial markets is expected to ease, while emphasizing the need to pay attention to the aspect of financial regulation in the real estate market.
◇"Starting in the second half of next year, the issue of 'supply shortage' will become prominent"
Seven experts predicted that the issue of decreasing housing supply will emerge prominently starting in the second half of next year. They believe that political matters and the Constitutional Court's judgment will likely stabilize before mid-year. House construction has fallen for three consecutive years until this year, and its repercussions are expected to begin next year. It is anticipated that from next year until 2026, there will be approximately 100,000 units short in supply compared to new housing demand, and there is a high possibility that the supply during 2026–2027 will not even meet half of the new housing demand.
Cho Young-gwang, a researcher at Daewoo Engineering & Construction, stated, "By 2027, housing supply will only meet half of new demand, and if the political logic drives the market in the first half of next year, it will instead move based on market logic in the second half, which could contribute to rising house prices."
Seol Jin-hyung, a professor at Kwangwoon University in the Department of Real Estate Law, stated, "Including the Constitutional Court's ruling, around 7 to 8 months later may be the point at which transaction volume can recover, with a long-term polarization phenomenon expected to occur as distinctions emerge between Seoul, the metropolitan area, and local areas."
Some experts are paying close attention to the recent rise in jeonse prices. As demanders find it difficult to secure their own homes due to lending restrictions, they are moving to the jeonse market, leading to rising jeonse prices. According to the Korea Real Estate Agency, the jeonse price for apartments in Seoul increased by 0.01% in the second week of December compared to the previous week, continuing an upward trend for 82 consecutive weeks. The rate of increase has also far surpassed that of sales prices. According to KB Real Estate, the jeonse price increase rate for apartments in Seoul from January to November this year is 6.3%, which is more than double the sales price increase rate of 2.6%.
Woo Byung-tak, head of the Real Estate Team at Shinhan Bank's WM Business Division, stated, "As the supply of move-in units decreases, if sales do not increase, the demand for jeonse will increase, leading to a persistent upward trend in jeonse prices, which is likely to push sales prices back up due to this situation."
There is also a view that jeonse and sales prices will form a box range under the premise that lending restrictions will intensify next year. Even if the Bank of Korea lowers the base rate two or three times, if lending restrictions are tightened, it will be difficult to supply liquidity to the market. The government is expected to implement the third stage of the stress DSR, which imposes additional charges on all household loans, in July next year.
Park Won-gap, the senior real estate expert at KB Kookmin Bank, commented, "If rate cuts are seen as supplying liquidity to the real estate market, then lending restrictions would be like tightening the money supply; thus, there will be a tug-of-war between these two financial variables next year, and it's expected that overall market contraction will maintain a box range without significant rises or falls in jeonse and sales prices."