September Nationwide Apartment Presale Outlook Declines Across the Board: "Burden Increases Due to Rising Interest Rates"

Seoul Metropolitan Area Down 4.5 Points, Non-Metropolitan Regions Down 7.4 Points
Presale Price Outlook Up 1.2 Points

The nationwide apartment pre-sale outlook index for September dropped by an average of 6.9 points compared to the previous month. This is attributed to increased burdens surrounding housing financing, as both lending regulations and rising interest rates have coincided.

A view of the apartment area around Gangnam as seen from the Lotte World Tower Sky Observatory in Songpa-gu, Seoul. Photo by Dongjoo Yoon

According to a survey released by the Housing Industry Research Institute on September 8, the nationwide apartment pre-sale outlook index for September, based on responses from housing developers, stood at an average of 86.3. The pre-sale outlook index is a quantifiable indicator that examines conditions for planned or ongoing apartment developments, as assessed by housing developers. An index above 100 means the outlook is positive, while a figure below 100 indicates the opposite.

The index for the Seoul metropolitan area (Greater Seoul) was projected at 84, down 4.5 points. For non-metropolitan regions, the index dropped by 7.4 points to 86.8.

Within the metropolitan area, Seoul was projected to fall by 3.4 points, Incheon by 6.5 points, and Gyeonggi Province by 3.6 points, with all three regions falling below the baseline of 100 for the second consecutive month.

The Housing Industry Research Institute analyzed, "In the capital region, stricter lending regulations remain in place and have been compounded by higher interest rates, leading to greater financial burdens for homebuyers. On top of this, uncertainties surrounding the planned revision of real estate tax policies and concerns over high sales prices have further weakened developers’ confidence in the pre-sale market."

Most areas in non-metropolitan regions were also projected to decline. In Jeonnam, the index fell by 28.9 points, in Jeju by 25 points, in Gyeongnam by 18.2 points, and in Gangwon by 11.7 points. In contrast, Busan is projected to see an increase of 10.2 points, Daegu 8.1 points, and Chungnam 1.3 points. Ulsan maintained a level of 100, unchanged from the previous month.

The Institute explained, "In the provinces, the pre-sale outlook index dropped mainly in non-urban regions, as the oversupply of unsold units continues and as higher interest rates add further financial pressure on potential buyers. As of July, approximately 85% of the 29,000 unsold newly completed homes nationwide were concentrated in the non-metropolitan regions, so the pressure on local pre-sale markets remains substantial."

The pre-sale price outlook index for September rose by 1.2 points from the previous month to 108.8. This increase is interpreted as a result of continued upward pressure on construction costs, such as materials and labor expenses.

The pre-sale volume outlook index rose by 9 points to 97.1, while the unsold unit outlook index increased by 14.9 points to 105.9.

The Institute analyzed, "Ahead of the peak autumn pre-sale season, expectations that sales schedules postponed during the summer off-season will resume, combined with improved business conditions due to expanded financial support measures for developers included in the August 13 Housing Supply Policy, have had some impact. However, ongoing concerns over subdued application demand as a result of tighter lending and higher interest rates kept the index below the baseline of 100.0."

Regarding the increase in the unsold unit outlook index, the Institute explained: "As the backlog of unsold units in provincial regions continues, overall nationwide unsold housing has risen for three consecutive months, fueling expectations that unsold inventory will increase going forward."

This content was produced with the assistance of AI translation services.