The outlook for the housing market in Seoul has worsened significantly over the past month. Rising interest rates and a growing wait-and-see attitude among homebuyers have dampened sentiment among housing developers in the Greater Seoul area, while some regions outside the capital are expected to improve due to a recovery in transactions and a decrease in unsold homes.
On November 11, the Korea Housing Industry Research Institute reported that the national housing market outlook index for November rose by 5.7 points from the previous month to 92.1. In the Greater Seoul area, the index fell by 14.4 points to 85.8, while non-metropolitan areas saw an increase of 10.0 points to 93.4.
Seoul experienced the largest decline within the Greater Seoul area, dropping 23.2 points from 110.0 to 86.8. Gyeonggi Province fell by 16.7 points from 100.0 to 83.3, and Incheon decreased by 3.1 points from 90.6 to 87.5. The continuous rise in mortgage rates over the past five months has led to a decrease in apartment transactions in Seoul, particularly in the Gangnam area, contributing to a negative outlook among developers.
In contrast, non-metropolitan areas generally showed improvement. Jeonbuk recorded a significant increase of 25.0 points to reach 100.0, while Jeonnam (81.8) and Gangwon (90.9) rose by 21.8 points and 21.7 points, respectively. Chungbuk and Gyeongbuk also saw increases of 20.0 points each. Sejong recorded a rise of 13.8 points to 107.1. However, Busan experienced a decline of 10.0 points to 80.9.
The Korea Housing Industry Research Institute explained that the substantial rise in the non-metropolitan index is due to a recovery in housing transactions in some regions and a decrease in unsold homes, which has somewhat alleviated concerns about a housing market downturn.
The outlook for financing conditions for housing developers has also deteriorated. The financing index for November fell by 11.0 points from the previous month to 69.8. Although there was optimism last month due to expanded project financing guarantees and reduced guarantee fees, the recent rise in corporate loan interest rates has increased financial burdens.
Conversely, the materials supply index rose by 3.2 points to 98.3. The decline in the won-dollar exchange rate to the 1,320 won range last month is expected to ease the burden of import prices for raw materials. However, volatility in international oil prices and high costs for key construction materials like rebar remain significant challenges.
* This article has been translated by AI.
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