[Desk Column] The 'Housing Price Peak Theory' Without Echo

[Asia Economy Jeong Doohwan, Deputy Director and Head of Construction and Real Estate Department] Recently, housewives have been actively joining the online real estate "Study Cafe," which is gaining popularity among young people trying to buy their own homes. Whenever new real estate products are supplied across the country, heated debates break out in various online cafes about subscription strategies and expected premiums after winning the lottery. Comments expressing envy such as "jackpot lotto" appear on winning news, while complaints like "I keep losing even after dozens of attempts" pour in.

However, looking at the posts, it seems that rather than genuine demand from those trying to buy a home before prices soar further, the overwhelming majority are so-called "short-term traders" who aim to immediately resell officetels or residential hotel facilities with a premium after winning. By putting in only 2 to 3 million won as subscription deposit, if they win, they can resell for a premium of tens of millions of won, leading to remarks like "you're a fool if you don't do it."

The "panic buying" among young people continues as well. With skyrocketing house prices, young people are now rushing to old row houses and multi-family houses on the outskirts of the metropolitan area, as even small to medium-sized apartments on the outskirts of Seoul exceed 1 billion won. There are even reports of prospective subscribers attempting to disguise their residence by moving into goshiwons located in the relevant areas to increase their chances of winning pre-subscription for apartments, revealing a sense of desperation.

The real estate market, entangled with "fear" and "greed," is a reflection of our society shaped by the relentless "house price control" policies implemented during the four years of the Moon Jae-in administration.

House prices continue their high-altitude march today. According to the Korea Real Estate Board, the house price increase rate in the metropolitan area in June was 1.04%. This is the first time in four months that the increase rate has reached the 1% level since 1.17% in February. Considering that the house price increase rate in Seoul during this period was 0.49%, it can be said that Gyeonggi and Incheon effectively led the rise in house prices.

However, the government policies introduced to curb house prices are faltering. The government's housing supply plan, which surpasses the 2 million units supplied during former President Roh Tae-woo's era, is facing delays or the risk of collapse due to opposition from residents and local governments in various locations. The project on the idle land of the Gyeonggi Gwacheon Government Complex, already considered a prime site, has been canceled, causing the supply of 4,000 households to vanish into thin air. There are also rumors of a possible scale reduction for the 10,000-unit Taereung Golf Course site.

Although the pre-subscription schedule for the 3rd phase new towns, which will release a total of 30,000 households by the end of the year, began in earnest last week, the enthusiasm for purchasing homes does not seem to subside. Last week, the Seoul apartment sales supply-demand index was 105.1, exceeding 100 for 14 consecutive weeks since the first week of April. An index above 100 means there are more buyers than sellers in the market.

Amid this, the government appears to be countering by raising the theory of a housing price peak. They say, "There is a high possibility that housing prices are overvalued, so rational judgment by buyers is necessary," or "Housing prices may fall in 2 to 3 years, so please invest carefully while waiting." These are earnest requests from the heads of the Ministry of Economy and Finance and the Ministry of Land, Infrastructure and Transport, the main government agencies responsible for the public.

Is this an appeal because house prices are not controlled despite all the measures? The unfortunate reality is that the market's response to the government's "housing price peak theory" is close to indifference beyond distrust. There is concern about how to restore trust in policies that seem to have nowhere left to fall.