Expectations among housing business operators for the nationwide apartment presales market in June appear to have cooled.
On the 9th, the Korea Housing Institute said that a survey conducted from May 19 to 28 of member companies of associations related to dwellings found the nationwide apartment presales outlook index for June came in at 69.4, down 10.6 points (p) from the previous month.
When the presales outlook index exceeds 100, it means more businesses have a positive view of the future presales market. Below 100 means the opposite.
Regional differences were clear. The greater Seoul area held up relatively well at 84.3, down 1.3p from the previous month, but areas outside the metro area fell sharply to 66.2, a steep 12.6p drop.
Seoul held at 100.0 for a second straight month. The Korea Housing Institute explained that expectations for the presales market have been sustained as home prices continue to rise due to a lockup of listings and a shortage of supply increasing the scarcity of newly built apartments, and a shift from jeonse leases to purchases.
According to Korea Real Estate Board (REB) statistics, in the third week of May, Seoul apartment prices rose 0.31% from the previous week, the biggest increase in 16 weeks, and climbed another 0.25% last week, extending the uptrend. However, as anti-speculation policies and tighter lending regulations dampened buyer sentiment and higher construction costs increased the presales price burden, the market outlook failed to improve further.
Incheon (72.4) and Gyeonggi (80.6) edged down 2.6p and 1.2p, respectively. In the regional presales market, only North Jeolla (81.8) was unchanged, while declines dominated in all other areas. Gwangju plunged 24.4p, the biggest drop, followed by Daegu (-19.7p), Daejeon (-18.9p), Busan (-16.6p), South Chungcheong (-15.6p), and North Gyeongsang (-13.2p).
Behind the nationwide average index falling well below the baseline (100.0) is a deep polarization between the greater Seoul area and the regions. Unsold homes are piling up mainly outside the metro area, and a combination of funding burdens for construction costs and tighter financial regulations has broadly increased anxiety among builders.
Meanwhile, the supply price of new apartments is expected to rise further due to increased expense burdens. The June presales price outlook index was 109.0, up 4.3p from the prior month. As conflicts in the Middle East drag on, prices of essential construction materials such as naphtha and asphalt concrete have surged, adding pressure to building costs.
The presales volume outlook index was tallied at 92.6, up 9.5p from the previous month. As the real estate market shows signs of recovery centered on the greater Seoul area, expectations have grown that supply volumes delayed while timing was being weighed will begin to be released little by little. Still, with permits and groundbreaking figures having fallen sharply, worries about supply shortages persist.
In addition, the outlook index for unsold inventory was found at 98.6, down 1.4p. As home prices in Seoul and the greater Seoul area keep rising, a visual illusion has made prices at existing unsold complexes look relatively cheaper, and there is a view that renters unable to afford surging jeonse deposits will turn to buying unsold dwellings.