Starting in the middle of next year, predictions suggest that the real estate market slump will begin to ease. The Housing Industry Research Institute held a press briefing on the theme of '2025 Housing Market Outlook and Policy Directions' at the Korea Chamber of Commerce and Industry in Jung-gu, Seoul, on the morning of the 19th and forecast that housing prices will return to a strong trend after April of next year.

The Housing Industry Research Institute predicted that next year's housing prices will show weak trends until around March and then turn strong after the middle of the year, with an anticipated annual decline of 0.5% nationwide, an increase of 0.8% in the metropolitan area, and a rise of 1.7% in Seoul. It also expected that rent prices will increase by 1.2% nationwide, 1.9% in the metropolitan area, and 1.7% in Seoul due to a decrease in the overall amount of incoming housing.

2025 dwellings sales price forecast. /Courtesy of Housing Industry Research Institute

The Housing Industry Research Institute noted, "Due to the current government's adherence to a balanced budget and the austerity trend, the weakening economy is expected to accelerate in the first half of the year, and the abnormal high interest rates on housing loans and lending restrictions are likely to persist until the first half of the year. However, the rapid increase in the population entering the housing market in their 30s, the possibility of interest rate reductions, and the normalization of housing loans and project financing may lead to a thawing atmosphere in the housing market after the middle of the year."

It was added, "While many media reports indicated that the ongoing impeachment situation might act as a downward factor for housing prices in the first half of next year, there was almost no impact during the impeachment of President Roh Moo-hyun, and during the impeachment of President Park Geun-hye, the rate of price increase decreased for 2 to 3 months but quickly recovered."

Regarding rental prices, it was stated, "Both apartments and non-apartments are expected to see a significant decrease in incoming housing next year, which is anticipated to drive a shortage of supply, leading to a rise in monthly rental prices. The rise in rental prices is likely to transfer to an increase in housing prices again."

Next year's transaction volume for dwellings is estimated to be around 630,000, similar to this year, which corresponds to 3.1% of the total housing stock. Given that during normal transaction periods the housing market typically averages around 900,000 transactions and ranges between 4% and 5%, the transaction volume for this year and next year is only expected to reach about 70% of the normal transaction volume.

The Housing Industry Research Institute pointed out, "To expand housing supply, we have been easing various regulations such as permits since last year and devising measures to alleviate difficulties in urban redevelopment projects while also expanding the designation of public land. However, supply has not kept pace due to deepening difficulties in housing finance, which is a core factor in supply reduction, and delays in land development procedures."

They further stated, "Rather than preventing speculation, the abnormal housing finance-related regulations only increase the burden on actual demand-side users and inhibit supply. We must prioritize normalizing these regulations, quickly improve issues with construction costs, project financing, and excessive contributed acceptance. We should focus on shortening public land development procedures to ensure that housing supply in the third new town gets underway as soon as possible."