“After the Ministers of Economy gathered to discuss plans to boost domestic consumption, the situation turned into an impeachment crisis. Regardless of whether there is a change in government, it will be inevitable to go with an expansionary fiscal policy.”
Seo Jong-dae, head of the Korea Institute of Housing Industry, held a press briefing on the topic of '2025 housing market outlook and policy direction' on the morning of the 19th at the Korea Chamber of Commerce and Industry in Jung-gu, Seoul.
Seo noted, “If we proceed with an expansionary fiscal policy, interest rates will fall, and there is a possibility that the real estate market could explode next year,” adding that “low interest rates and economic expansion, along with supply shortages, will lead to soaring prices.”
On the same day, the Korea Institute of Housing Industry presented the forecast that next year's housing transaction prices would show weakness until March, then turn strong in the second half, with an annual decline of 0.5% nationwide, a 0.8% rise in the metropolitan area, and a 1.7% rise in Seoul. It also projected a 1.2% rise nationwide in jeonse prices due to an overall decrease in move-in volumes, a 1.9% rise in the metropolitan area, and a 1.7% rise in Seoul.
Regarding supply volume, it was explained that the number of commencement permits from January to October this year increased by 34% to 218,000 units compared to the same period last year, but the number of permits issued decreased by 19.1% to 245,000 units. Including all commencement, sale, and completion volumes, the Korea Institute of Housing Industry forecasted that the supply volume next year would decrease by about 30% compared to the average.
Seo explained, “The increase in commencements this year is due to a backlog of projects that received permits last year, the year before, and even earlier, which were not started before,” stating that “apartments that began construction three years ago are now being completed, so while the supply volume hasn’t decreased significantly this year, we will face a severe supply shortage beginning next year.”
Meanwhile, regarding the current impeachment situation, Seo pointed out, “If the impeachment decision is made quickly, the waiting period for housing transactions will shorten, and its impact on the housing market could be minimal, but the issue is loan regulations,” adding that “trying to control house prices by restricting loans is like telling a person with a stomachache not to eat.”
Additionally, Seo remarked, “There is no other country like ours where the government directly applies DSR,” emphasizing that “when customers approach banks, it is to assess their loan status, not for the government to dictate stress DSR to raise or lower interest rates,” and criticized, “The Financial Supervisory Service is not a policy-making entity. Where is there an oversight body that dictates terms? Is it a dictatorship or a developing country?”
In a follow-up Q&A session, when asked how he views the Ministry of Land, Infrastructure and Transport's prediction that there won't be a shortage of housing supply in Seoul next year, Seo responded, “Looking only at Seoul, the completion volume next year will be similar to the increase in basic demand. However, in the metropolitan area as a whole, there will be a shortage,” adding, “As population shifts from the outer regions of the metropolitan area to newly constructed towns begin, Seoul's population will decline. However, if there are sales next year, residents will move in around 2029, which will significantly increase upward pressure.”