The outlook for apartment sales in May improved sharply. Analysts said the rapid rise in jeonse prices and shrinking jeonse supply triggered a jeonse crunch, spurring demand to buy homes outright and improving the sales outlook.
On the 12th, the Korea Housing Institute said that a survey of housing business operators found that the nationwide apartment sales outlook index for May was 80.0, up 19.1 points (p) from the previous month. By region, the greater Seoul area was expected to rise 4.5p (81.1→85.6), and non-capital regions 22.2p (56.6→78.8). A sales outlook index above 100 means more businesses view the outlook positively, while below 100 means the opposite.
In the greater Seoul area, Seoul rose 2.9p (97.1→100.0) from the previous month to reach the baseline of 100. Incheon 8.3p (66.7→75.0) and Gyeonggi 2.4p (79.4→81.8) also saw improved sales outlooks, with all expected to rise. The institute said, "Regarding Seoul's sales outlook index reaching the baseline of 100, as the entry threshold to Gangnam has risen due to excessively high prices and loan regulations, demand to buy a home shifted to surrounding areas where prices are relatively cheaper, fueling expectations that sales will do well in those areas," and added, "On top of this, the recent steep rise in jeonse prices is also stimulating buying sentiment." According to the Korea Real Estate Board (REB), Seoul apartment jeonse prices in the third week of last month rose 0.22%, the biggest increase in 6 years and 4 months. During the same period, Seoul apartment sale prices rose 0.15%.
Sales outlooks in non-capital regions also recovered across all areas. By region, North Chungcheong rose 35.0p (40.0→75.0), the largest improvement. South Jeolla 29.2p (33.3→62.5), Busan 27.7p (55.6→83.3), North Jeolla 27.3p (54.5→81.8), Ulsan 24.6p (60.0→84.6), and Gangwon 24.5p (45.5→70.0) followed.
Although the national average sales outlook index rose sharply, it is still 80.0, below the baseline (100.0), making it hard to say the sales market outlook has recovered.
Meanwhile, the May sales price outlook index came in at 104.7, up 0.2p from the previous month. With key material costs such as paint and windows rising due to naphtha supply instability from the prolonged Middle East war, and with higher exchange rates increasing the unit cost burden of imported raw materials, interest expense from rising real estate project financing (PF) rates has been reflected in pre-sale prices, sustaining upward pressure on prices.