September Housing Business Outlook Drops in Non-Metropolitan Areas: "Unsold Inventory and Weak Demand Persist"

Sharp Decline in Gwangju and South Jeolla After Semiconductor Cluster Boost

Metropolitan Area Sees Modest Gains in Seoul and Gyeonggi

The housing business outlook index for non-capital regions saw a sharp decline in September. While unsold new homes continue to accumulate and demand remains sluggish, the drop was particularly pronounced in the Gwangju and Jeonnam areas, where positive sentiment in the housing market had previously improved due to the development of the semiconductor cluster.

Apartment complexes in the Bundang-gu area, Seongnam, Gyeonggi-do. Photo by Yonhap News.

According to a survey conducted by the Housing Industry Research Institute targeting housing business operators on September 15, the housing business outlook index for this month fell by 8.7 points from the previous month to 79.9. The outlook for the capital region rose by 3.1 points to 89.2, whereas the index for non-capital regions dropped by 11.2 points to 77.9.

The housing business outlook index uses 100 as the baseline. A figure above 100 indicates that most housing business operators expect the housing market to improve, while a figure below 100 means that most anticipate market conditions will worsen.

In particular, the outlook for most non-capital regions has steeply declined in September. The decrease was 32.8 points in Jeju, 25 points in Ulsan, 25 points in Chungbuk, 19.1 points in Jeonnam, and 16.8 points in Gwangju.

The Housing Industry Research Institute analyzed, "While there had been an upward trend in recent months due to expectations of positive sentiment spreading from the capital region, the recent announcement of policies imposing heavier taxes on owners of multiple homes, continued accumulation of unsold new homes, and weak demand led to a major decline. The drop is especially significant in areas such as Jeju, Chungbuk, Jeonnam, and Gwangju, where the index had seen substantial increases recently. As of July, about 85% of the 29,000 unsold new homes nationwide were concentrated in non-capital regions, which means the burden on housing business operators in local markets remains high."

In the capital region, the index for Seoul climbed by 4.4 points, Gyeonggi Province by 7.4 points, but Incheon dropped by 2.5 points.

The Housing Industry Research Institute commented, "Expectations for supply incentives and business environment improvements following the August 13 Measures also contributed to a slight increase in the index. In Seoul, areas with a high concentration of low- to mid-priced housing such as Nowon and Jungnang continue to see price increases. In Gyeonggi Province, the rise expanded noticeably in southern areas influenced by the strength of the semiconductor industry." However, the Institute added, "Market uncertainty remains as mortgage regulations, higher market interest rates, and increased financial costs persist, and transaction volume in the capital region is also declining."

The capital procurement index for September is projected at 75.4, up 2 points from the previous month. The Housing Industry Research Institute stated, "Expectations for improved financing conditions have been reflected, as the August 13 Measures included stronger financial support for housing supply projects, such as expanding project financing (PF) guarantees and funding, and lowering guarantee fees." However, the Institute also noted, "Despite these measures, recent hikes in the key interest rate and rising market rates are increasing financial costs, making capital procurement still a challenge for business operators."

The materials procurement index is forecast to fall by 6.6 points to 88.7. The Institute explained, "The decline appears to be due to the fading prospect of an end to the Iran war, persistently high construction costs, and ongoing price pressures on key building materials such as rebar. In particular, the prolonged conflict in the Middle East is pushing up global oil prices, fueling concerns about further rises in the cost of raw materials, transportation, and material procurement overall."

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