Seven out of ten Koreans expect house prices to rise in the first half of next year.
As a result of a survey conducted by Real Estate 114 on the ‘Housing Market Prospect for the First Half of 2021’ to 1,439 people nationwide from November 9 to 23, 69% of those who responded to sales and 77% of those who responded to Jeonse predicted that housing prices would rise.
Compared to the previous survey, 49% of sales respondents and 63% of jeonse respondents predicted a rise in housing prices, the proportion of the increase increased significantly.
In addition, real estate 114 has the highest percentage of rising responses since the survey began in 2008. On the other hand, the outlook for a decline was only 5-7% of the total respondents (7.51% for sales and 5.42% for jeonse).
Although the government has announced various regulatory policies, it is analyzed that, contrary to expectations, housing prices have steadily risen, affecting consumer responses.
The increase in the sale price is due to ‘the concentration of demand in the metropolitan area and lack of supply in the downtown area of Seoul’
About half of the responses to the increase in sales prices were ‘increase in apartment prices in Seoul and other metropolitan areas’ (45.52%).
The real estate 114 is analyzed to be because Seoul and Gyeonggi and Incheon, which have good accessibility from the first half of this year, led the market price increase.
This was followed by “intensifying supply shortages in downtown Seoul” (27.69%). This is because the number of apartment occupants is expected to decrease significantly next year, mainly in Seoul and the metropolitan area. In addition, ▲ the balloon effect in areas that have risen less (16.14%), ▲ the outlook for the domestic economic recovery in the first half of 2021 (4.38%), and ▲ the revitalization of the apartment sale market (3.59%) were also selected as factors for the increase in housing prices.
26.85% of respondents who predicted a decline in sales prices cited “possibility of a macroeconomic recession” as the main reason. Due to COVID-19 this year, the domestic and global economic growth rate has turned negative, and there is concern that it could lead to a recession in the real economy such as real estate.
The next decline was ▲increased sales volume due to tax burden (25.00%) ▲increased sales volume due to price burden (21.30%) ▲rental companies and multifamily properties increased (10.19%) ▲weakened buying momentum due to loan regulations (8.33%) ▲ They answered in the order of advance subscription and public housing supply expectations (7.41%).
Rising Jeonse Price ‘Influenced by Enforcement of the Lease 3 Act’
Of the 1116 people who answered that the price of jeonse would increase, 31.09% said that it was due to the effect of the implementation of part of the 3rd lease law (right to apply for contract renewal and limit system for monthly rent). This is because, under the influence of the new lease law that took effect at the end of July, the jeonse and monthly rental markets were reorganized mainly on renewal of contracts, and the number of jeonse items decreased significantly.
A high response was also given to 'supply of jeonse items due to lessors' preference for monthly rent (24.82%)'. Due to the prolonged low interest rate in history and the strengthening of the holding tax, the pace of rent conversion of lessors is faster than in the past.
This was followed by ▲ lack of housing in popular areas such as Seoul (19.18%) ▲ increasing demand for jeonse due to weakened purchasing sentiment (17.20%) ▲ temporary increase in jeonse housing for subscription (5.56%).
The main reason for the decline in the Jeonse price was “the risk of returning the rental deposit due to high jeonse prices” (33.33%). Recently, as there have been cases in which the Jeonse price approaches or exceeds the sale price, the number of cases in which the Jeonse Guarantee Insurance Company returned the deposit on behalf of the landlord has increased significantly.
Next, they cited ▲the impact of the government’s announcement of measures to stabilize the jeonse and monthly rental markets (28.21%) ▲the increase in jeonse items due to gap investment (23.08%) ▲the decrease in the demand for jeonse due to the conversion of existing houses (15.38%) as reasons for the decrease in jeonse prices .
A key variable in the first half of next year, ‘whether or not government regulations such as loans and taxes will continue’
About 3 out of 10 Koreans chose “whether the government will continue to regulate real estate such as loans and taxes” (26.75%) as a major variable in the first half of next year. The government plans to increase the market price reflection ratio of the published price to 90%, and the burden of the ownership tax on multi-homeowners is expected to increase significantly. The burden of tax payment has increased, especially among owners of high-priced houses in Seoul, the metropolitan area and metropolitan cities.
In addition, as a major variable, “external economic conditions such as the speed of economic recovery at home and abroad” (17.16%) were selected. Negative growth this year is inevitable due to the impact of Corona 19, but the growth rate of 2~3% next year is predicted due to the base effect. However, it is difficult to predict the end of the COVID-19 pandemic, so it remains to be seen whether the macroeconomic downturn will continue.
Next, ‘whether or not the jeonset price anxiety flow continues’ (16.19%) was asked. Since the enforcement of the 3rd Lease Act (right to apply for contract renewal and limit on monthly rent), the increase in the Jeonse price has exceeded the rate of change in the sale price, acting as a variable that stimulates the sale price. If the trend of jeonse price anxiety subsides early, the trading market is highly likely to be stabilized. However, if it becomes difficult to settle early, it may be pushed into the jeonse market and increase the demand to switch to trading.
The sampling error is ±2.58 percentage points at the 95% confidence level.
