The government's failure to introduce strong housing supply measures could lead to a sharp rise in housing prices in the upcoming fourth quarter (October to December), according to predictions from a private research institution.
On the 5th, the Korea Housing Institute held a seminar on housing supply activation measures in collaboration with the Housing Society and the office of Yeom Tae-young, member of the National Assembly from the Democratic Party of Korea, at the National Assembly building in Yeouido, Seoul.
Housing prices in the metropolitan area, which had skyrocketed around popular areas in Seoul, are currently stabilizing due to the psychological boundaries caused by the June 27 measure that limits housing mortgage loans to 600 million won and additional measures.
Kim Deok-rye, head of the housing research division at the Korea Housing Institute, noted, "Based on the experiences of the Roh Moo-hyun and Moon Jae-in administrations, there are concerns that the effects of this measure may last only 3 to 6 months," adding that without swift and robust supply measures such as rapid supply of third new towns, lifting regulations to promote private dwellings, and revitalizing urban maintenance, the pent-up demand for transactions could resurge, leading to a significant increase in housing prices in the fourth quarter.
Kim added, "Starting in the second half of the year, the revitalization of reconstruction in first new towns and popular areas of Seoul may spread the rising trend triggered by reconstruction complexes to nearby regions, while in large cities outside Seoul, the current downward trend is unlikely to change significantly due to unsold inventory and local economic downturns."
It was projected that overall dwelling transaction prices would drop by 0.2% nationwide this year, while prices in Seoul would rise by 3.0%, prices in the metropolitan area by 1.5%, and prices in rural areas by 1.2%.
Kim anticipated that regarding future rental prices, "The volume of apartments ready for occupancy this year will decrease by more than 100,000 units compared to the average of the last 2 to 3 years, and due to the increase in household differentiation from the rise in housing prices in the first half of the year, rental prices will continue to rise; however, due to rental fraud and a reduction in rental deposit guarantees by 80%, the transition from jeonse to monthly rent will increase, limiting the extent of the increase."
However, monthly rent is increasing as the supply of non-apartment rental properties, which are major rental items, has decreased by about 70% compared to the average of previous years last year and this year, and the conversion of jeonse to monthly rent is also increasing, especially focusing on multi-family homes and officetels.
Kim predicted, "If a groundbreaking measure to expand the supply of non-apartments is not introduced immediately, this trend will likely continue for the time being."
To stimulate the supply of private dwellings, Kim proposed ▲ the reality adjustment of basic and standard construction costs ▲ the rationalization of excessive fees and relaxation of equity ratios for bridge loans and project financing, ▲ the easing of balance loan restrictions, ▲ the swift implementation of measures for unsold inventory, ▲ the proper adjustment of contributed acceptance and public contributions in urban development projects, ▲ the improvement of the additional taxation system for multiple homeowners, ▲ the rationalization of contract renewal regulations under the Commercial Lease Act, and the establishment of compensation provisions, and ▲ the activation of dwelling supply for single-person households.
Regarding measures to activate public housing supply, it was suggested to ensure rapid supply of third new towns through shortened public land development periods and excessive restrictions on recovering development profits in urban redevelopments and reconstructions.