Sejong Sees a 'Warm Breeze' Amid November Chill in Nationwide Presale Market... Hopes Rise for More Central Agencies to Relocate

Housing Industry Research Institute's November Presale Outlook Index
Sejong Surges 22.1 Points
Only Region Nationwide to Exceed the Benchmark

Amid a chill across the nationwide apartment presale market due to tighter lending regulations and the burden of interest rates, Sejong’s market alone showed a steep upward trend. The government’s formal announcement that central administrative agencies based in the Seoul metropolitan area would relocate to Sejong is believed to have fueled expectations of increased housing demand.

A view near the Government Complex Sejong. Yonhap News.

A survey of housing developers by the Housing Industry Research Institute on November 5 found that Sejong’s apartment presale outlook index for November rose 22.1 points from the previous month, making it the only region to exceed the benchmark of 100.

The presale outlook index is a numerical indicator based on a survey of housing developers about the conditions of complexes preparing for or already conducting presales. A reading above 100 indicates a positive outlook, while a reading below 100 indicates a negative one.

A major boost from the relocation of public institutions underlies the improved outlook for presales in Sejong. After the government announced on October 13 that it would move ahead with plans to relocate 44 institutions, including central administrative agencies and their affiliated committees still based in the Seoul metropolitan area, expectations grew that the move would bring a significant influx of new demand from civil servants and public-institution employees.

By contrast, the nationwide presale market index fell 1 point to 81.3. The index for the Seoul metropolitan area dropped 5 points to 87, while the non-metropolitan area index declined 0.2 points to 80.

Seoul’s index fell 14.3 points to 91.4, dropping below the benchmark again after one month. Gyeonggi was forecast at 85.7, down 1.1 points. Incheon, meanwhile, edged up 0.6 points to 83.9.

The Housing Industry Research Institute said, "The rise in lending rates, the burden of securing financing due to lending regulations, and weak home-sale prices in the Gangnam area affected developers’ sentiment."

In the non-metropolitan area, the outlook improved in North Gyeongsang Province, up 23.5 points, and North Chungcheong Province, up 8.2 points. By contrast, the index fell 24.6 points in North Jeolla Province, 16.9 points in South Jeolla Province, and 10.8 points in Busan.

The Housing Industry Research Institute said, "Outside Sejong, non-metropolitan areas remained below the benchmark in most cases, as unsold homes continued to weigh on the market and home-sale prices stayed broadly flat." It added that "the outlook for the presale market will likely be affected by the Bank of Korea's interest rate decision in November, discussions on tax reform bills such as the comprehensive real estate tax, and trends in the monthly rental and jeonse markets in the Seoul metropolitan area."

The presale price outlook index for November stood at 112.1, down 2.2 points from the previous month. The Housing Industry Research Institute said, "Construction costs, including labor expenses, appear to remain a burden."

The presale volume outlook index fell 6.2 points to 90.9, while the unsold housing outlook index rose 6.6 points to 115.2. The Housing Industry Research Institute said this reflected "growing concerns that rising lending rates will dampen demand for housing subscriptions." It added, "Of the 28,000 homes that remained unsold after completion at the end of September, 84% were concentrated in non-metropolitan areas, reflecting concerns that it will take longer to clear unsold homes in provincial regions."

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