[Initial Perspective] Will 'Jonbeo' Win in the Remaining 'Chaotic Year'?

[Asia Economy Reporter Kangwook Cho] "Only jonbeo is life way by Warren Buffett."

A few years ago, I received a KakaoTalk message from an acquaintance quoting a famous saying by the global investor Warren Buffett. Of course, it was a joke. It was a playful Korean-style twist on Buffett’s long-term investment philosophy, who advocates "If you are not going to hold for more than 10 years, don’t hold even for 10 minutes." As you know, ‘jonbeo’ is a shortened slang term combining the vulgar word ‘jon*’ and ‘to endure,’ meaning ‘to persistently endure.’

In fact, the neologism ‘jonbeo’ first appeared around late 2017 during the so-called ‘Bitcoin frenzy.’ Amidst the crazy price surge, everyone borrowed money to board the ‘coin train,’ but when they hit the wall of government regulations, the market crashed sharply, and the phrase ‘going to Hangang River’ became common. However, Bitcoin recently hit a record high of over 80 million won per coin last month, and the phrase ‘jonbeo wins’ shouted by cryptocurrency investors at the time became a reality.

Recently, ‘jonbeo’ is being reenacted in the real estate market. From the 1st, heavy taxes on multi-homeowners such as holding tax and capital gains tax surcharges, and the implementation of the monthly rent reporting system have been enforced, but the housing and apartment sales market is experiencing a transaction freeze, and gift transfers are surging. Many multi-homeowners are expected to receive tax bills more than twice as high as last year, but the market has entered a ‘holding out’ phase. The government’s policy goal to pressure multi-homeowners with strong regulations to flood the market with listings before the regulations take effect, thereby leading to price adjustments and market stabilization, has missed the mark again.

Seoul housing prices, which showed a flat trend at the beginning of the year, have turned upward again. The interpretation is that despite the transaction freeze, the reduction in listings and price increases are because many multi-homeowners prefer to gift surplus homes to their children or expect prices to rise further and thus are holding out. Expectations that the supply side, which the government had neglected, could expand with measures like the 2·4 Plan and the 3rd New Town pre-subscription plan have largely disappeared due to obstacles such as the speculation and public official real estate scandals involving the Korea Land and Housing Corporation (LH) related to the 3rd New Town. Although President Moon Jae-in reflected after the by-election defeat, saying he was ‘awakened as if struck by a bamboo stick’ and promised to revise real estate policies, the results were only minor adjustments. There is also great disappointment that major pillars like comprehensive real estate tax and capital gains tax remain untouched.

Meanwhile, the government and ruling party are attempting another change in real estate policy. In particular, the Democratic Party has separately formed a task force (TF) for supply measures at the party-government level and said it would propose ‘unimaginable real estate supply policies.’ Doesn’t this sound similar to the ‘drastic supply measures’ promised by President Moon earlier this year?

The problem is that the current administration has less than one year left in office. How much groundbreaking supply can be achieved to stabilize housing prices in the remaining year, and how much will the market trust and wait for it? Is it too much to say that the reason multi-homeowners chose ‘jonbeo’ is a desperate measure stemming from the loss of trust in the chaotic real estate policies of the ruling party and government? In a situation where it is confusing how many measures have been taken, we can only hope that the remaining year will not become a chaotic real estate political landscape but not just a temporary fix to appease voters.