The South Korean government said leading indicators of housing supply have improved and price gains have slowed in Seoul, pointing to a stronger foundation for market stability over the medium to long term.
The Ministry of Land, Infrastructure and Transport (MOLIT) said on the 18th in a press reference document that its housing supply expansion measures and lending rules have improved leading supply indicators and produced signs of downward stabilization in parts of the market.
Housing permits, a leading supply indicator, totaled 36,000 units in Seoul over the six months through August, up 74% from a year earlier and above the 2016-2025 long-term average of 28,000 units, according to the ministry. Construction starts in Seoul came to 17,000 units over the same period, below the long-term average of 31,000 units but 45% higher than a year earlier.
On market trends, sale prices in the Gangnam and Seocho districts have fallen for 10 consecutive weeks, while price gains across Seoul have slowed since July. Apartment transaction volumes in Seoul have declined broadly since May, and listings for sale recently stood at about 74,000, a 30% increase from the start of this year.
The ministry stressed that sentiment is also cooling from overheated levels, with its consumer sentiment index for the Seoul housing sale market declining since July on falling prices in major areas and rising interest rates. The index fell to 130.8 last month from 139.9 in July, according to the Korea Research Institute for Human Settlements (KRIHS).
In the near term, the government said it needs to monitor conditions closely because upward and downward pressures are mixed. Upward factors include fewer new homes ready for occupancy, rising national income, greater purchasing power from booming industries such as semiconductors, and expectations of further price increases. Downward factors include the higher policy rate and rising mortgage rates. Over the medium to long term, however, the ministry projected that supply and demand conditions will improve significantly from 2028, when move-ins to the third-phase new towns begin in earnest, as the results of supply measures become increasingly visible through rising permits and construction starts in both the public and private sectors.
The ministry also cited demographic and regional policy shifts as medium- to long-term stabilizing factors. Seoul's household growth rate slowed sharply to 0.83% last year from 2.20% in 2020 and could turn negative after 2038. In addition, national balanced development policies, including the "five poles and three special zones" initiative and a second round of public agency relocations, are expected to disperse housing demand from Seoul and the surrounding metropolitan area to other regions.
"We will continue to monitor market conditions closely while maximizing stabilizing factors such as supply expansion and minimizing destabilizing factors, responding to market conditions in a timely manner so that housing stability for the public can be achieved," the ministry said.