"If You Don't Buy Now, Prices Will Rise More"... Policy Failures Fuel 'Home Buying Anxiety'

Seoul Apartment Transactions in June Surpass 10,000 for the First Time This Year
Jeonse Crisis Worsens, Subscription Wins Virtually Impossible
Repeated Government Real Estate Measures Each Time Witness Sharp Price Surges
Husband as Landlord, Wife as Tenant Situation Raises Concerns of Schemes

[Image source=Yonhap News]

Quotation

#Newlywed A, who got married last August, has been delaying the marriage registration until now. This is because they are aiming for the 'Newlywed Special Supply' given to couples within seven years of marriage. They planned to register the marriage after having a child to increase their chances of winning. However, recently A has even considered the trick of immediately purchasing a house under the husband's name and then moving in as a tenant. This is based on the idea that even if they do not move in within six months, they can secure the necessary funds by obtaining a jeonse loan.

Last month, the volume of apartment sales transactions in Seoul exceeded 10,000 units for the first time this year, which is widely seen as a clear example that the government's real estate policies have not curbed housing prices but rather increased disappointment and market anxiety. The fear of soaring housing prices and the dread of failing to own a home have led to 'Yeongkkeul' (borrowing every possible fund) hoarding.

◆If you can't buy now, it's forever... Buy even cheap apartments in the outskirts= Experts have particularly noted that the increase in transaction volume is concentrated in areas like Nowon and Gangseo districts, which had been relatively excluded from the housing price rise. In the Gangnam area as well as most Gangbuk regions, prices for small apartments around 59㎡ and even 84㎡ have surged to around 1 billion KRW. As a result, young people such as newlyweds without significant assets find the market practically inaccessible, leading to anxiety that forces them to buy whatever houses remain in the outskirts.

The problem is that as buying demand shifts, housing prices in the outskirts are also soaring. Especially in the Gangbuk area, apartments in Nowon-gu, known for relatively good educational conditions, are seeing panic buying by young people, pushing prices to record highs. The actual transaction price of a 59㎡ unit in Jugong Complex 11 in Sanggye-dong, Nowon-gu, jumped from 427 million KRW in April to 500 million KRW in June. The 84㎡ unit in Lotte Castle Gold Park Phase 1 in Doksan-dong, Geumcheon-gu, changed hands from 1.05 billion KRW in May to 1.137 billion KRW in June. The 84㎡ unit in Sindorim Taeyoung Town in Guro-dong, Guro-gu, also surged from 905 million KRW in April to 980 million KRW in June. Seeing these transaction price changes, the fear that 'if you don't buy a house now, you'll be pushed to the outskirts' is spreading among young people. Even the Korea Real Estate Board statistics clearly show the rising housing prices in these areas. In the fifth week of June in Seoul, the sales price increase rates stood out in Gangseo (0.10%), Gangbuk (0.10%), Guro (0.09%), Nowon (0.08%), and Dobong (0.08%) districts.

The proportion of young people in the housing sales market has also increased. From the beginning of this year until May, people in their 30s accounted for 30.7% of apartment sales transactions in Seoul. This is noticeably higher compared to 25.3% in the first half and 29.8% in the second half of last year. Since the June 17 real estate measures introduced a six-month move-in obligation for mortgage loans starting from the 1st of this month, it is expected that the transaction share of young people in June has increased further. Mr. B, in his 30s, who recently purchased a house in Banghwa-dong, Gangseo-gu, Urban Development Complex 12, for around 400 million KRW, said, "Prices rose by 10 million KRW in an instant, and I signed the contract at that price with tears in my eyes," adding, "I felt somewhat relieved when I heard that the property was traded for 20 million KRW more a few days later."

[Image source=Yonhap News]

◆A continuous vicious cycle, policy trust hitting rock bottom= Recent market conditions are said to only intensify the housing price fears among people in their 30s. As buying demand concentrates, expectations of rising prices spread, leading to frequent withdrawal of listings. Mr. C, in his 30s living in Ha Wangsimni-dong, Seongdong-gu, who decided to cancel his apartment jeonse contract, said, "Since the June 17 measures, prices of nearby older apartments have risen by 10 million KRW every time I blink," adding, "I'm trying to persuade my parents to help with funds, but the anxiety over further price increases keeps me awake at night." A real estate agent in Ha Wangsimni-dong explained, "Since people can check actual transaction prices online instantly, homeowners absolutely refuse to sell below market prices," adding, "So, buyers often end up raising the price during negotiations." The fear of rising prices stimulates buying demand, which causes listings to be withdrawn or withheld, creating a vicious cycle that further drives up prices.

Some predict that the government's failure in real estate policy could shake not only public fear but also the political landscape. The recent direct intervention by President Moon Jae-in to order extraordinary measures for housing price stabilization is seen as reflecting this sense of crisis. Analysts also link the recent decline in President Moon's approval ratings to the housing issues faced by people in their 30s. According to the polling agency Realmeter, in the first week of July, President Moon's approval rating (positive evaluation) dropped by 3.5 percentage points from the previous week to 49.8% (29.3% very good, 20.5% good). This is the first time since the third week of March that the approval rating fell into the 40% range during weekday surveys.