Korea’s housing business sentiment slipped to a fresh annual low in September as fledgling market recovery was stamped out by the latest government price cap on pre-construction apartment offerings.

The Korea Housing Institute’s housing business survey index (HSBI) forecast for September was 61.7 points, down 6.5 points from the previous month to hit its lowest level so far this year.

The survey asks housing businesses their outlook on the housing market. A reading below 100 means suppliers are more pessimistic than optimistic about market prospects.

The housing market remained subdued, with the index hovering in the 60-point range for the second straight month. Sentiment worsened after the government announced last month to cap the maximum price of new apartment offerings in Seoul and some parts of Gyeonggi Province on signs of overheating in reconstruction projects.

The September HSBI forecast for Seoul fell 22.2 points from the previous month to 62.9, slipping to the 60s for the fifth time since the institute started compiling such data in 2017.

The blow all came from the government. The HSBI fell to 51.9 in December 2016 and 66.2 in January after the November housing measures. Regulations introduced in August 2017 had driven the index down to 59.7 the following month. Most recently, the index hit 63.0 in September 2018 following a slew of new housing measures introduced that month.

In terms of the market impact as measured by the HSBI, the government’s latest price cap was seen as weaker than the 2017 measure but more severe than last year’s.

August figures were also grim. The HSBI for the entire country was 67.0 in August, down 6.2 points from the previous month. Seoul stopped short at 61.1 and Daegu 67.6, faring lower than Gwangju (74.0), Sejong (86.9) and Daejeon (88.0). Ulsan (47.3), Busan (59.2) and Gangwon (53.3) reported the worst readings.

By Park In-hye and Kim Hyo-jin

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