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|TITLE||Divergence of regional real estate markets and implications|
Divergence of regional real estate markets and implications
1. Since the 2008 global financial crisis, with an increased housing supply rate and stabilized property prices, regional real estate markets have hinged on regional economic landscape changes rather than macroeconomic changes and policies.
2. According to a survey, households mostly pointed out upside factors while realtors mostly suggested downside factors. Many believed that regional conditions such as regional development projects and regional economic situation greatly affect regional real estate markets, albeit differing depending on regions.
3. Both households and realtors saw such overhaul projects as redevelopment and reconstruction, as well as regional economic landscape as primary upside factors, and sharp increases in housing supply and interest rate hikes as major downside factors.
4. Those in the Seoul metropolitan area and other metropolitan areas focused on an upturn driven by overhaul projects such as redevelopment and reconstruction, whilst those in areas outside of the Seoul metropolitan area gave more attention to downside factors such as rapid growth of housing supply.
5. Regional real estate markets are diverging from each other. For instance, Jeju is witnessing an unprecedented upturn in the real estate market, as its economy gains momentum from a series of developments and net population inflows. On the other hand, Geoje and Ulsan where shipbuilders are concentrated are seeing real estate markets freezing amid a downturn in the shipbuilding industry and the corresponding restructuring.
❶ It is recommended to step up monitoring of regional real estate markets, with regional conditions, rather than macroeconomic factors or policy factors, sparking a divergence in regional real estate markets.
❷ As regional real estate markets are becoming more interconnected with regional economic landscape, it is suggested to draw up more specific policies that take into account diverse regional conditions as well as real estate markets.
❸ In order to increase the accuracy of the diagnosis and forecasting of regional real estate markets, it is required to reflect consumer sentiment and utilize big data in a comprehensive manner.
Seil Byun, associate research fellow at KRIHS, Gyusik Kim, researcher at KRIHS, Boram Bang, researcher at KRIHS, Chungyu Park, director of Real Estate Market Research Center
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