In recent years, in Korean movies and TV dramas such as Parasite and Squid Game, you can see that the protagonists live in very bad living conditions. This is because the housing prices in South Korea have remained high for many years and even increased more and more! However, since the middle of last year, housing prices in South Korea have suddenly plummeted! Unexpectedly, many Koreans said that their lives have become worse. What is going on? Today, let us talk about "Korean real estate market"! Hiho~ Hello everyone, I am Zhiqi! South Korea has been known for its "high housing prices" for many years , especially in Seoul. There is even a legend that housing prices in Seoul "only rise but never fall". Therefore, many young Koreans describe themselves as living in "Hell North Korea". Not only can they not afford to buy a house, but they can only afford to rent an environment. A bad private room (examination center) plus (rooftop room), or "semi-basement". However, South Korea's housing prices have been declining since the middle of last year. Not only did housing prices in Seoul drop by more than 20% , but also Busan, Daegu, Incheon, etc. House prices in major metropolitan areas have also experienced double-digit declines. Paradoxically, houses have become cheaper, but the lives of many Korean renters have fallen into deeper troubles , and some have even been forced to go to a dead end . This episode of ours is ours. The topic chosen by the wishing pool for member welfare issues will be discussed with you about why Korean housing prices have been rising for so long? So why did it suddenly drop? And why does falling house prices make the lives of renters worse? But before we start today’s discussion, let’s go into some business service time! [Do Korean house prices only rise or not fall? 】 According to South Korean official data , South Korean housing prices have been rising almost all the time in the past 20 years. Specifically, there are two main rounds of obvious increases that occurred after the financial crisis in 1997 and the 2008 financial crisis. There is analysis. It is believed that this is because, during the two financial crises, the housing supply decreased due to the market downturn and the Korean government introduced relatively loose policies on the real estate market in order to stimulate the economy. Secondly, it is because South Korea generally regards real estate as a As the main means of accumulating assets, housing prices also rose when the economy recovered. In response to this situation, former South Korean President Moon Jae-in, who took office in 2017, launched the slogan of "residential justice" and said that young people should also be able to afford housing. During his term of office, he launched more than 20 housing policies , such as targeting people who hoard houses, raising the house ownership tax, and raising the comprehensive property tax, property transfer tax, etc. in "overheated areas for real estate speculation". However, this series of preventive measures not only failed to achieve As a result, South Korea's housing prices are rising more and more fiercely. From 2017 to 2021, South Korea's housing prices have increased by as much as 20%. Especially in the greater Seoul area, which has about half of South Korea's population , the median price of apartments has increased from 690 million in 2017 to 690 million at the current exchange rate. The conversion is about NT$19 million, which will increase to 980 million won in 2021 , which is more than NT$24 million . Why on earth are Korean housing prices soaring? To explain this situation, we must first understand Korea’s unique “rental housing” [Korea’s “full rented housing” system] The so-called “full rented housing” is a special rental system in Korea. Tenants only need to “borrow” a deposit from the landlord to rent a house. The amount usually falls between 50% and 80% of the house price, and you can move in and live in the house. The full-rental contract usually lasts for two years, except for water and electricity bills, which you have to pay yourself . And after the contract expires, it will not be renewed. The landlord will have to return all the deposit to the tenant, which is a bit similar to the concept of a pawn shop. The landlord can get a large interest-free loan by "pawning" the house to invest in business , and the tenant can get it without giving the landlord half a cent. The key to living in a "free" house is just to collect that huge deposit. Many banks in South Korea offer special loan programs for full renters. The interest rates are often much cheaper than the monthly rent. Therefore, full rent houses in South Korea are quite It is generally popular among young people. A report in 2021 pointed out that the home ownership rate in South Korea is only 56% . There are many people renting houses, and about 60% of them rent "full-rent houses." The full-rent house system is incompatible with housing prices . What does it matter? [The trend of real estate speculation under full-rental housing] To talk about how full-rental housing has triggered the trend of real estate speculation, we must first mention a very key factor: low interest rates. After the financial crisis in 2008, South Korea’s basic interest rate gradually started from 4%. It was lowered to around 1.5% during Moon Jae-in’s term, and it dropped to around 0.5% after the outbreak. Then when housing prices have been rising for a long time and interest rates are falling lower and lower, investing in real estate “theoretically” becomes A sure-profit business . So in recent years, many people have taken advantage of the full-rental housing system and continued to buy houses for investment. For example, if someone "rents out" a house worth 1 million and receives a deposit of 800,000, then assuming a mortgage loan The down payment is 20% of the house price. He can use this deposit to buy four more 1 million houses. If he rents out all these four houses, he can buy 16 more houses . In this cycle, South Korea appears. Many "big landlords" own hundreds or even thousands of properties. According to reports, the top 30 most active buyers in South Korea purchased nearly 8,000 properties between 2018 and 2022. During this frenzied acquisition of properties, housing prices have also been increased. At the same time, people who really need to buy a house will panic and buy a house because of the expectation that "house prices will only rise but not fall." Buying a house with debt will not only increase household debt in South Korea, but also further push up housing prices . In other words, "all renting" It has almost become an unlimited leverage tool that allows investors to amplify their profits countless times when the real estate market is good . However, in contrast, when the real estate market is bad, losses will also increase by the same amount [South Korea’s real estate market collapsed! 】 After the war between Ukraine and Russia started, the U.S. Federal Reserve raised interest rates multiple times, which caused the Korean won to depreciate sharply against the U.S. dollar. South Korea also faced serious inflation. In June last year, South Korea’s consumer price index had an annual growth rate of as high as 6%, which was not only higher than Taiwan’s. 3.59% and Japan's 2.4% are both much higher and set a new high in South Korea in 24 years. Therefore, the Bank of Korea later decided to "follow up on the interest rate increase" and the base interest rate rose all the way from 0.5% in 2021 to 3.5% . Because South Korea has More than 80% of mortgage loans have floating interest rates, so mortgage interest rates are also rising. According to the data released by South Korea's top five banks in February, their average mortgage interest rate range has risen to about 5 to 8% . Previously, people who bought houses under the all-rent system The mortgage expenditures of landlords who own a bunch of houses have skyrocketed . In addition, the increase in interest rates has further dampened the trend of buying houses , causing South Korea's housing prices to fall across the board. According to Reuters, from the middle of last year to the middle of this year, South Korea's national house price index fell by more than 100%. 8% This is also the largest drop since the official release of data. The drop in house prices has also led many tenants to decide not to renew their leases after their leases expire . They want to get their deposits back quickly. However, after the tenants quit the lease, the full deposit for the newly rented house is required. As house prices shrank along with it, landlords had to make up for it themselves, causing their cash levels to continue to drop. Later, in order to make up for the deposits to return to tenants, landlords had to sell properties at low prices, which caused house prices to fall further . However, some landlords found that They simply went bankrupt without paying the money themselves , and some even simply defaulted and ran away. But at this time, tenants are the ones who are hardest hit [As house prices fall, will their lives become worse? 】 In the past, due to the high housing prices in South Korea, many Koreans could not afford to buy a house or even had to rent a dilapidated house. Many young people simply gave up getting married and had children and felt desperate for the future. Now, although housing prices have fallen , many people still cannot afford it. There are even some full-rent tenants who have encountered major difficulties due to this housing market crisis. For tenants, the biggest risk of the full-rent system is that once the landlord goes bankrupt, goes to jail, or dies, the deposit may not be returned. And in this case After housing prices fell, many landlords filed for bankruptcy or even absconded with their money . Reports pointed out that in the first half of this year alone, there were nearly 20,000 lawsuits filed by tenants in South Korea who "sued landlords for not paying back their deposits." Compared with that, it has increased by 60% . Moreover, the houses rented by some people have been foreclosed due to the bankruptcy of the landlord and they have lost their place to live. What is even worse is that many people originally took out bank loans to pay the deposit, so they still have to continue to pay back the deposit. Under the pressure of debt, some people are also forced to desperation. According to Korean media reports , at least five renters in South Korea who suffered losses this year committed suicide. [What will happen next? 】 In the face of the housing market crisis, the South Korean government has gradually loosened its previous "housing crackdown policy" in recent months and introduced measures such as temporary policy loans. The Bank of Korea has also started from February under the condition that inflation is relatively eased. After repeatedly announcing “interest rate freezes” to keep the benchmark interest rate at 3.5% , South Korea’s housing prices finally rose slightly by 0.03% in July, ending 13 consecutive months of decline. In August, they rose by 0.16% . However, there are properties Analysts believe that it is difficult for South Korean housing prices to rebound significantly in the short term because they believe that this housing price collapse may fundamentally change South Korea's rental structure, causing most people to no longer choose "full rent" but to rent monthly housing. Then this This means that in the short term, more full-rent tenants will not renew their leases after their leases expire, and more landlords will inevitably sell their properties to return their deposits. At the same time, the decision of the US Federal Reserve will also be a variable, because if The United States will raise interest rates again and South Korea will once again face economic dilemmas and continue to freeze interest rates. It will face the pressure of exchange rate depreciation and inflation. However, if it follows up on interest rate increases , it may further depress the housing market. [ Our point of view] Looking at the factors affecting housing prices. Interest rates are indeed a key factor last year. Of course, the rapid and continuous interest rate hikes by the U.S. Federal Reserve under inflationary pressure affected not just South Korea. Therefore, countries around the world also followed suit to raise interest rates, including Canada, New York, and the entire euro zone. Mortgage interest rates in Austria and other places have also risen to the highest point in recent years . However, the all-rental housing system makes South Korean housing prices particularly sensitive to interest rates, so this impact has been amplified. When we checked the information, we also saw that many people We will look at the situation in South Korea and look at Taiwan. In particular, the recent increase in housing prices in Taiwan has slowed down, so some people speculate that Taiwan may be the next place to experience a "house price avalanche." However, we have seen that many analysts hold the opposite opinion and believe that Taiwan's recent housing price increases. It is unlikely to fall as sharply as South Korea because from 2021 to now, South Korea's base interest rate has increased by 3%, while Taiwan has increased by about 1%. The rate of interest rate increase is relatively small . In addition, Taiwan does not have an almost unlimited upper limit for "full rent". Leverage tools , so the probability of chain reactions is relatively low . In this episode of "Clam" that we carefully produced , we will focus more on the "holding cost of real estate" regarding Taiwan's housing prices. This situation is quite difficult to explain. It’s complicated , so if you’re interested in understanding it, I highly recommend watching this video! Okay, finally I want to ask everyone, do you think South Korea's "all-rental housing system" is good or bad? Finally, if you like today's video, please share it to let more people know about "the problems of the Korean housing market"! In addition, you can also click here to see the introduction of "Taiwan's Housing Price Problem" and "Seoul's Rental Dilemma." So, today's Zhiqi Qiqi comes to an end here. See you tomorrow night!
