[The Editors' Verdict] There Is No "Top Instructor" in the Real Estate Market

The Now-Disappeared Sangseongronja
Outlook Is Just an Outlook, Should Not Be Blindly Trusted

The recently trending drama "Jaebeoljip Maknae Adeul" (The Youngest Son of a Conglomerate) is a fantasy time-travel story. The protagonist, who was born into poverty as a dirt spoon, is unjustly killed and then returns as the youngest son of a wealthy conglomerate family to live a second life. Ultimately, returning to live again means knowing all the major events of the future that have already happened. Based on this, the protagonist achieves great success in every investment.

The protagonist’s process of creating seed money was through real estate investment. When the conglomerate chairman grandfather offered a gift, the protagonist chose land in Bundang, which was then a wasteland, and after the development of a new town, sold it to gain a profit exceeding 20 billion won. This investment was only possible because he knew the future.

As the year-end approaches, various forecasts predicting the 2023 real estate market are flooding the market. However, none of them look promising. This is because house prices this year have shown a record-breaking decline, and the transaction freeze has deepened not only in existing homes but also in new sales and officetel markets, causing a sharp increase in listings and unsold inventory. Even the Dunchon Jugong reconstruction complex, once considered the largest since the founding of Korea, received a disappointing result, and concerns about the spread of real estate project financing (PF) crises have made the financial sector nervous. With demand shrinking, transaction freezes, and rapid price drops overlapping, the possibility of a hard landing is gradually increasing.

However, if we turn the clock back just one year, the situation was quite the opposite. Although the nationwide house price growth rate, which had reached its highest point in 14 years and 9 months last September, began to show signs of a gradual downward stabilization from October, proponents of rising prices still claimed it was a temporary adjustment and insisted that "there is no reason for house prices to fall in 2022." The invincibility myth of Gangnam remained, and with the inauguration of the Yoon Seok-yeol administration, the market showed optimistic expectations.

The problem is that many 2030 household heads, enticed by such rosy forecasts, took out "Yeongkkeul" (borrowing to the max) loans to buy homes or invest in real estate, significantly increasing their debt burdens. According to the "2022 Household Financial Welfare Survey" announced by the government this month, the average debt of households under 30 exceeded 100 million won for the first time, rising 2.1% from 99.66 million won last year to 101.93 million won. In particular, the average debt of household heads under 20 increased by more than 40% compared to a year ago, recording the highest debt growth rate. Because of this, a real estate expert recently met expressed that when asked by acquaintances about next year’s house prices, he can only be very cautious. No matter how well he answers, he said, it’s just breaking even.

Concerns about a hard landing in the real estate market are growing. It is said that the troubled government recently gathered market experts to ask about solutions for a soft landing. However, only fundamental answers such as deregulation and market normalization were given. Unless one is living a second life returned from the future, who can know what will happen next? It is unclear where all the proponents of rising prices have gone now, but they cannot be blamed unconditionally. Forecasts are just forecasts and should not be blindly trusted. There is no pinpoint "top instructor" in the real estate market. The youngest son of a conglomerate is just a fantasy.