Seoul apartment pre-sale outlook turns positive for first time in 3 months amid jeonse crunch

Seoul's apartment pre-sale outlook index has climbed above the baseline of 100 for the first time in three months, driven by rising home prices amid a deepening jeonse shortage. A reading above 100 indicates that more developers hold a positive outlook than a negative one.

According to a survey of housing developers conducted by the Housing Industry Research Institute from Sept. 17 to Sept. 29, Seoul's October apartment pre-sale outlook index rose 11.8 points from the previous month to 105.7. The institute attributed the improvement to a sustained rise in home prices across Greater Seoul areas beyond the Han River belt, fueled by a worsening jeonse and monthly rent shortage, which lifted developer sentiment toward the pre-sale market.

Jeonse supply in Seoul has grown increasingly scarce, sending prices sharply higher. The cumulative increase in Seoul apartment jeonse prices this year stood at 8.35 percent as of Oct. 5, according to the Korea Real Estate Board. The board's national housing price trend survey showed that the average jeonse price for a Seoul apartment reached about 636.63 million won ($477,000) in August, up more than 82.68 million won from 553.95 million won in August 2024. Analysts said these market conditions have contributed to improved developer sentiment in Seoul's pre-sale market.

Across the greater metropolitan area, all regions posted gains — Incheon rose 9.2 points (74.1 to 83.3) and Gyeonggi Province climbed 2.9 points (83.9 to 86.8). However, both Incheon and Gyeonggi, despite their month-on-month gains, remained below the baseline of 100.

Outside the greater metropolitan area, most regions posted declines as unsold unit backlogs and weak housing demand persisted. North Gyeongsang Province fell the most, dropping 23.5 points (100.0 to 76.5), followed by Gangwon Province down 13.3 points (80.0 to 66.7), South Gyeongsang Province down 11.2 points (81.8 to 70.6), Daejeon down 11.1 points (94.4 to 83.3), Busan down 9.7 points (82.4 to 72.7), Ulsan down 7.1 points (100.0 to 92.9), North Chungcheong Province down 7.1 points (88.9 to 81.8), Daegu down 6.4 points (86.4 to 80.0), South Chungcheong Province down 6.0 points (84.6 to 78.6), North Jeolla Province down 5.4 points (90.0 to 84.6), Gwangju down 5.3 points (100.0 to 94.7) and Jeju down 4.4 points (75.0 to 70.6). South Jeolla Province and Sejong bucked the trend, rising 16.9 points (60.0 to 76.9) and 1.0 point (92.3 to 93.3), respectively.

"We need to watch how the Bank of Korea's benchmark interest rate decision scheduled for Oct. 22, the National Assembly's review of the tax reform bill, the announcement of new public housing sites in the greater metropolitan area, and the government's broader housing supply policy will affect the pre-sale market — as well as how unsold unit trends in regional areas develop," an institute official said.

The October pre-sale price outlook index rose 5.5 points from the previous month to 114.3. The increase appears to reflect the Ministry of Land, Infrastructure and Transport's Sept. 15 decision to raise the standard construction cost under the price ceiling on new apartments by 4.07 percent to account for higher indirect construction costs in line with the government's push to strengthen safety investment. With the standard construction cost raised again just two months after an off-cycle revision in July, sustained upward cost pressure has reinforced expectations of higher pre-sale prices.

The pre-sale volume outlook index held steady at 97.1, unchanged from the previous month, while the unsold unit outlook index rose 2.7 points to 108.6. The institute said the prevailing view is that unsold units will increase going forward, as apartment subscription demand remains concentrated in Seoul and a few other areas while subscription shortfalls continue in regional markets.