"Because of major economic indicators and the accumulation of supply shortages, home prices next year have no choice but to rise. Prices will not surge as sharply as this year, but a decline looks very unlikely. A bigger concern is jeonse and monthly rent. The upward trend in jeonse and monthly rent is more likely to be stronger next year than this year."Seo Jong-dae, head of the Korea Housing Institute
A forecast said the Seoul metropolitan area dwellings market is highly likely to maintain an overall upward trend in 2026. In Seoul, both dwelling prices and jeonse prices are expected to rise more than 4%.
The Korea Housing Institute (KHI) said this at a press briefing on the 23rd at the Korea Chamber of Commerce and Industry in Jung-gu, Seoul, under the theme of "Outlook for the 2026 housing market and policy direction." Based on liquidity and interest rates, which have been found to have had a major impact on dwelling price fluctuations over the past 20 years, as well as dwelling supply and demand and the economic outlook as key variables, KHI predicted next year's dwelling prices. Attending the briefing were head Seo Jong-dae, associate research fellow Kim Su-hyun, and Deputy Minister Kim Deok-rae.
According to the Korea Housing Institute, dwelling sale prices are expected to rise 4.2% in Seoul and 2.5% in the Seoul metropolitan area. Areas outside the metropolitan area are also expected to rise 0.3%, with the nationwide figure up 1.3%.
Jeonse and monthly rent prices are expected to see stronger gains next year than this year. Nationwide is projected to rise 2.8%, the metropolitan area 3.8%, Seoul 4.7%, and non-metropolitan regions 1.7%, respectively. This is because jeonse and monthly rent supply has decreased due to a decline in move-in volumes, signals of heavier taxes on multiple-home owners, and permit systems that force end users to buy and move in. In particular, the metropolitan area is expected to face greater upward pressure due to a shortage of move-in volumes and a stronger shift to monthly rent.
Next year's dwelling transaction volume is forecast at around 650,000, down from this year. That amounts to 3.2% of the total dwelling stock. Considering that normal trading periods without market overheating or slump saw around 900,000 units, this year's and next year's dwelling transactions are only about 70% of normal levels.
KHI projected that next year's dwelling supply volume will decrease further from this year due to the decline in apartment groundbreaking volumes two to three years ago. With unsold inventory piling up and an increase in land purchased but not yet broken ground after acquisition, the financial capacity of dwelling developers has deteriorated; amid credit downgrades and tighter regulations, bridge loans and project financing (PF) for early-stage land acquisitions in development projects are also difficult, and high funding rates are making it very hard to launch private dwelling construction projects. To compensate, the public sector, including the Korea Land & Housing Corporation (LH), is increasing supply, but it remains far short of the annual demand of 450,000 to 500,000 units.
Based on approvals and groundbreaking volumes through this year and the available timing for using public housing sites, a forecast for next year's supply shows approvals at 400,000 units, up from 386,000 this year; groundbreaking at 320,000 units, up from 278,000 this year thanks to increased public sector groundbreaking by LH and others (Moon administration average 530,000); pre-sales at 240,000 units, up from 230,000 this year (Moon administration average 320,000); and completions at 250,000 units, sharply down from 342,000 this year (Moon administration average 510,000).
KHI stressed that the metropolitan area needs annual supply of 250,000 units. With an active role by the public sector such as LH and market revitalization, approvals next year are expected at 220,000 units, up 20,000 from this year, and groundbreaking at 210,000 units, up 40,000; but completions are expected at 120,000 units, down 30,000 from this year due to reduced groundbreaking volumes two to three years ago, about half the usual average.
KHI proposed easing the land transaction permit system and loan regulations as policy directions. Senior research fellow Kim said, "For dwellings that multiple-home owners are renting out, even if they want to sell, end users cannot move in immediately before the lease term ends, making a sale impossible," and noted, "When buying a dwelling that is currently rented, the move-in date should be adjusted to the point when the minimum lease term (two years) ends so listings can come onto the market." Kim added, "For end users without a home, there is a need to appropriately supplement loan regulations."