"Anti -fever" in South Korea's property market: In the first half of the year, apartment transactions cut their home debt sharply or dragged down the economic recovery

21st Century Business Herald reporter Hu Huiyin Guangzhou report

Lost out of guard, the popular Korean property market suddenly "cools down".

According to data released by the Korean Real Estate Commission at the end of July, from January to June, the number of apartments traded nationwide was 18,4134, a decrease of 50.6%over the same period last year, the lowest level since 2006. When the number of house transactions decreases, the average house price in South Korea also ushered in a decline. Data from the committee show that in the first half of this year, the national average house price fell 0.16%, and the price of Seoul fell by 0.25%during this period.

South Korea's rent prices have also changed. The monthly residential statistics of the National Bank of Korea showed that the average rental price of the apartment in Seoul fell from 6779.2 million won in June to 6778.8 million won in July, the first month -on -month decrease in 39 months.

Except for South Korea, recently, house prices in Canada, New Zealand and Australia have fallen a lot. Behind this is related to these countries accelerating the pace of interest rate hikes. Some analysts believe that after the interest rate hikes, Canada, New Zealand, Britain and other countries have also increased, the mortgage interest rate has also increased, which has a great blow to buyers' property enthusiasm.

In this case, the debt problem due to mortgages is particularly prominent in South Korea. A report issued by the International Financial Association (IIF) showed that in the first quarter of this year, South Korean household debt accounted for 104.3%of the total domestic product (GDP), ranking first among 36 countries and regions surveyed.

Seoul's house prices hit the biggest decline in 26 months

The property market encountered the "cooling" of volume and price, which made many Korean people feel suddenly.

According to data from the South Korean Real Estate Commission, in the first half of this year, the average housing price nationwide fell 0.16%, while the capital Seoul fell more obvious, and the price fell by 0.25%at the same time. The price decline continued. Just last week, the price of the Seoul apartment in 26 months fell. Data show that the transaction volume in Seoul in June decreased by 73%year -on -year. Throughout the first half of the year, the transaction volume in Seoul's apartment decreased by 79.4%year -on -year.

In South Korea, the decline in real estate prices is rare. Because in the past years, house prices in South Korea have been soaring, and many people think that investing in real estate in South Korea is a way to get rich.

Talking about the hot reasons for the Korean real estate market, Dai Erbiao, the director and professor of the Institute of Growth, Japan, told the 21st Century Business Herald reporter that there are several factors: "First of all, the area of ​​South Korea's land is 100,000 square kilometers and the population density is very high; secondly In recent years, South Korea's economic growth momentum is good, GDP per capita is approaching Japan, and confident optimism has risen. Furthermore, in order to stimulate the economy and cope with the epidemic, Europe, America, and Japan and South Korea have scrambled to launch financial easing policies to lead to the flood of currency. Below, I believe that the majority of citizens that will continue to rise in Korean house prices will lead to a hot market in the real estate market. "

Faced with high housing prices, the South Korean Moon Jae -in government has issued a 25 -wheeled property market regulation policy in 5 years, but it has been very small, and house prices are still rising step by step. According to data from the National Bank of Korea, in May 2017, the average price of buying an apartment in the capital Seoul was 607 million won, and in October 2021, the average price reached 1.21 billion won.

"During the Wen Zaiyin government, housing prices in the metropolitan area in Seoul, South Korea rose more than doubled. The people still wanted to borrow loans to buy a house because I believe house prices will continue to rise." In January of January, real estate prices fell for the first time. Since then, due to the increase in interest rates in the United States, the national house prices have significantly declined, and the recent decline has gradually increased. The current expectations of rising house prices in South Korea have been greatly reduced. According to the laws of "buying up and not buying and falling" in real estate, it is expected that the demand for the Korean property market will continue to decline.

Park Long, a researcher at the Public Policy Research Institute of Nanjing University and a part -time researcher at the Government Research Center of the National University of Seoul, also told the 21st Century Business Herald that the reduction in Korean real estate prices is closely related to the government's interest rate hike. He said that since the Central Bank of Korea has raised the benchmark interest rate many times in the second half of last year, house prices have been effectively suppressed. In particular, after April this year, Korean house prices have begun to decline.

Falling house prices may not mean that the Korean property market has reached an inflection point. Kashif Ansari, CEO of the co -founder group of Asia Real Estate Technology Company, said: "Koreans use real estate as the main wealth, but there are obvious home purchase gaps in South Korea, South Korea under 40 years old, South Korea Human house ownership rate is significantly lower than those over 40 years old. "

The South Korean government is launching a series of measures to boost the sluggish property market, including the proposed comprehensive real estate tax tax rate for four years. This tax is aimed at multiple sets of residential owners. In the future, taxation will only apply tax rates according to the tax standard, which has nothing to do with the number of houses. In this regard, Park Long believes that this is mainly to expand the transaction volume.

In addition, the preferential policy of the property market also includes: from August 1st, the upper limit of the proportion of loans (LTV) of the first house buyer in South Korea was relaxed to 80%; The regulations that need to be dealt with within 6 months will be extended to 2 years; residential guarantee loans for the purpose of stable living funds are relaxed from 100 million won to 200 million won. The effect of these measures remains to be observed, but Yan Yuejin, the research director of the Think Tank Center of the Easy House Research Institute, believes that the continued entering the Korean real estate market will be the norm. "Outlook -oriented economies like South Korea are highly related to the volatility of the global economy. If the external environment will not improve, funds will accelerate into the real estate market and exacerbate the real estate market bubble." He added.

Family debt risk has soared

Due to the implementation of interest rate cuts and multiple rounds of fiscal stimulus under the epidemic, South Korea, like other developed economies in the world, has to bear the "bitter fruit" brought by currency super issuance.

Since the beginning of this year, the Bank of Korea has raised interest rates three times, but inflation is still accelerating. Since then, house prices in South Korea have also begun to rise. A report released by Yiju in mid -July shows that since 2021, the benchmark housing prices of many households in South Korea have risen by 36%. Although house prices have fallen today, it is still at a high level, which means that the pressure of people buying a house is still very great. House prices are already high, and after interest rate hikes, the loan interest rate is expected to rise at the same time.

According to data from the Korean banking industry, as of June 10, the annual interest rate of the fixed interest rate of housing mortgage loans in the four major commercial banks in South Korea was 4.28%to 6.81%. The industry predicts that the benchmark interest rate may be adjusted to 2.75%before the end of the year, and the maximum housing mortgage loan interest rate will rise to more than 8%.

In addition, it is even more worrying that the burden on Korean family debt is constantly increasing. Data show that at the end of 2021, the ratio of Korean family liabilities to disposable income reached 206%. According to data from 36 major economies, the Institute of International Finance shows that the ratio of Korean family debt to GDP in the first quarter was 104.3%, which is one of the tallest countries in the world.

"South Korea's family debt and GDP are among the best among the member states of the Economic Cooperation and Development Organization (OECD). In 2022, the national debt nationwide is about 30,000 US dollars, which is very large." Consumption preferential policies, but the side effects are that like American consumers, South Korean people have also developed the habit of borrowing money. Among the Korean family debt with children, the mortgage debt has accounted for a large proportion in recent years. Therefore, the recent increase in interest rates in South Korea has brought bankruptcy risks to many families in South Korea.

It is reported that due to nearly three -quarters of family wealth in South Korea and real estate, rising mortgage interest rates may increase the breach of contract. South Korea's financial regulatory agencies predict that once the average mortgage interest rate rises from the current 5%to 6%to 7%, the number of loans of breach of contract may increase by 500,000 to 1.9 million.

Park Long said that the main reason for the increase in family liabilities is the overall rise in real estate mortgage loans brought about by the rise in house prices. However, he does not think that South Korea will have a large range of default rates, "because since 2018, the South Korean government has implemented a strict real estate mortgage loan system. It will not have a large range of default rates without falling. "

Even if the soaring family debt will not trigger the financial crisis, it will cause other negative effects. Several experts interviewed told reporters that excessive housing spending may weaken the consumption power of Korean families. Yan Yuejin believes that the proportion of housing expenditures in Korean families is very high. As the interest rate of mortgages rises, Korean family consumption will become very fragile. In addition to the epidemic, the income of the Korean people will be affected, which will further weaken the Korean families Consumption power.

At present, in the context of the tight geopolitical situation and the global epidemic situation, the South Korean economy has been affected by factors such as rising prices and slowing exports. It has analyzed that South Korea has increased economic downside risks in the second half of this year. From the perspective of specific data, South Korea ’s economic growth in the second quarter depends on domestic demand consumption such as clothing, catering and accommodation. In the quarter, personal consumption increased by 3%month -on -month, while equipment investment and import and export were recorded negative growth.

However, increasingly soaring inflation is still a stumbling block for South Korea's expansion of domestic demand. On August 2nd, data released by the South Korean government showed that the consumer price index (CPI) in July increased by 6.3%over the same period last year, higher than 6%in June. South Korea's central bank governor Li Changzheng said the previous day that the Bank of Korea may raise interest rates 25 basis points this month, but it does not rule out the possibility of a greater interest rate hike.

If South Korea raises interest rates again, it will inevitably have a suppression of consumption. Coupled with the rise in home debt, consumer motivation in South Korea may become more weaker.

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