[2020부동산결산]① Reasons for soaring house and total prices, government “liquidity” vs market “policy risk”

[편집자 주] This year, the housing market showed a sharp rise despite the corona 19 epidemic and the government’s strong regulations as the liquidity of the low interest rate became abundant. The government poured out measures every two months, but rather than stabilizing the housing market, it raised distrust. In particular, in the second half of the year, after the enforcement of the Lease Act, it not only provided an excuse to increase the rent for rent by increasing the rent for rent, but also led to a ballooning effect of the house price, stimulating the nationwide house price. Nevertheless, the remarks of the ruling party politicians and government officials aroused disappointment and anger in the people. We look back at the housing market this year that even coined new words such as ‘panic buying, young-kull, and thunderbolt’.

[서울=뉴스핌] Reporter Dong-Hoon Lee = This year’s housing market has been on the rise despite high-intensity regulations such as the government’s’general gift set’.

Anxiety about house prices, which started in Seoul, spread to provinces after Gyeonggi-do and Incheon. In the market, it is evaluated as the’balloon effect’ produced by tweezers regulation. The trend of housing demand in search of non-regulated areas continued throughout the year. Nevertheless, the government asserts that the policy direction and effect are positive. It is analyzed that abundant circulating funds due to ultra-low interest rates have flowed into the real estate market, and the increase in demand due to the separation of households is the main cause of house price uncertainty.

The interpretation of the cause may be mixed, but the reality is, contrary to the government’s intention, it was recorded as a year in which house prices and rental prices rose to the maximum in nine years.

◆ Real estate measures including supply plan 6 times…Once every two months

The government is confident that the housing market will stabilize this year. This is because the ’12·16 housing market stabilization measure’, which is considered a strong demand suppression measure at the end of last year, is expected to have a strong effect on the market.

Earlier this year, the housing market seemed to be moving as the government intended. By blocking mortgage loans for houses with a market price exceeding 1.5 billion won, raising the comprehensive real estate tax rate and capital gains tax rate, and reducing the benefits of acquisition tax and property tax for rental business owners, not only investment demand but also end-users have returned to the customs tax.

However, the balloon effect appeared in less regulated areas. Consumers turned their eyes to Suwon, Anyang, Uiwang, and Seongnam, avoiding Seoul, where expensive houses are concentrated. House prices have risen significantly when the improvement of the metropolitan transportation network and the favorable benefits of the maintenance business are combined.

Accordingly, the government announced the ‘2-20 measures’ and further designated Suwon (Yeongtong-gu, Gwonseon-gu, Jangan-gu), Anyang Manan-gu, and Uiwang-si as target areas for adjustment. This is because the rate of increase in apartment prices exceeded 1.5 times the average of the metropolitan area. They responded to market unrest by lowering the mortgage loan ratio (LTV) in the area subject to adjustment from 60% to 50%.

However, the balloon effect, which ignited once, spread to other regions despite strengthening government regulations. The atmosphere has shifted to Incheon and Daejeon, Gyeonggi-do Gunpo, and Uijeongbu. As liquidity increased further due to a cut in the base rate in May, apartment prices in the Gangnam area also showed a recovery trend. The implementation of the Yongsan Station Maintenance Depot site, the Samsung-dong Hyundai Motor Group new office building (GBC), and the Jamsil area MICE development plan had an impact.

As there was anxiety in the Gangnam region as well as in the mid- to low-priced regions, the government confronted with the ‘6.17 countermeasure’. In this measure, most areas of the metropolitan area, excluding some of the border areas, were grouped as regulated areas. It shows a willingness to block the phenomenon of the balloon effect any more.

In addition, Gap investment (buying a house with a jeonse) was blocked by designating Jamsil in Songpa-gu, Seoul and Samsung, Cheongdam, and Daechi-dong, Gangnam-gu, as land transaction permission zones. When purchasing a house in all regulated areas, a rule was also put in which, when receiving a mortgage loan (lead charge), the existing house must be disposed of and moved in within 6 months.

The government tightened regulations on corporations classified as real estate speculative demand. It banned the main charge altogether, and significantly strengthened the capital gains tax and comprehensive real estate tax.

Nevertheless, the balloon effect continued. In the metropolitan area, Gimpo and Paju led the market, and in the provinces, Busan, Daegu, and Changwon were strong. Accordingly, the government grouped all of these areas as target areas with the ‘11.19 countermeasures’ and designation of additional adjustment target areas (12.10). Currently, most of them are included in the regulated areas except for some of the Eup and Myeon areas.

◆’Liquidity’ vs’policy risk’ … difficult to find solutions

The analysis of the government and the market about this unrest in the real estate market is mixed.

The government cited liquidity and household separation based on ultra-low interest rates, and past government policies, as reasons why house prices are not stabilized despite subsequent regulations. According to the Bank of Korea, current funds released in the market in August reached a record high of 3100 trillion won. This is an increase of 9.5% compared to the same period last year. It is said that a large portion of the circulating funds flowed into the real estate market, which instigated a rise in house prices.

It is analyzed that the increase in demand for housing due to the separation of households also had an effect. From October last year to October this year, the population of Seoul decreased by 40,000, but the number of households increased by 96,000. It is interpreted that the increase in real demand for housing has had a significant impact on not only the jeonse price but also the house price.

In the past, the government’s deregulation of real estate is also a difficult part to solve the house price anxiety. The Lee Myung-bak administration lifted some of the speculative and overheated areas, and also eased tax regulations such as lending restrictions, capital gains tax and comprehensive real estate tax. It is evaluated that the Park Geun-hye administration continued its existing real estate policy and was active in deregulation by abolishing the pre-sale price limit. As a result of this deregulation, real housing demand and investment demand gradually increased, which in turn served as a burden on the current government.

The market valuation is somewhat different. It is true that demand for demand has increased due to increased liquidity, but policy failure is the biggest cause.

In a situation where demand for housing did not decline, the government was consistent with regulatory policy. The rag-type tweezers regulation created a balloon effect, and as the price of the house increased, the demand for my own house increased. Even if the tax regulation was increased, the reaction was “you can pay more tax”. When the effect of the countermeasure did not appear, the market developed tolerance and complained of fatigue.

The shortage of supply is also pointed out as a problem. The number of apartment occupancy and supply, as indicated by statistics, did not decrease significantly. According to the Ministry of Land, Infrastructure and Transport, the number of apartments in Seoul this year was 53,000, an increase from 46 million last year. Even compared to the fact that the average occupancy volume from 2017 to 2019 is 40,000 households, the absolute number does not decline sharply.

Nevertheless, the reason why the housing market is unstable is because the demand for singers has increased further. As of October this year, the average subscription competition rate of cumulative apartments in Seoul was 71.0 to 1. Compared to last year’s 31.6:1, it has more than doubled. Given the limited supply of housing in Seoul, the reinforcement of the restrictions on resale rights to pre-sale rights made it difficult for consumers to find their own home, which was expressed in the subscription competition rate. As such, the amount of supplies supplied to the market is not much different from the average year, but an increase in demand caused an imbalance in supply and demand.

The psychological part also worked here. The government’s restructuring, redevelopment, and maintenance business regulations are expected to reduce the volume. In Seoul, it is difficult to plan large-scale private sales except for maintenance projects, and the uncertainty of waiting consumers continued. The reality is that it is not easy to find a suitable housing even if you try to move to major areas in Seoul for reasons of work and education.

The impact of this change in regulation will appear in earnest from next year. The number of apartments in Seoul is estimated to be 2,6940 households, down by half from this year. In the next year, the number will decrease to 17,020 households. Gyeonggi Province will also decrease from 12,416 households this year to 103,754 households next year, and 80,000 households next year. It is difficult to increase the number of occupants more than expected in that the apartment construction period takes more than 2 years and 6 months. There is a possibility of further reduction in volume due to business delays. Industry interpretation is that there is a side in which the shortage of supply versus demand is driving the current rise in house prices.

◆ Effectiveness of supply measures is still… results are unknown

The government, which insisted that there was no shortage of annual housing supply, also implemented measures to expand it as the unstable house prices continued.

The ‘5·6 measures’ and ‘8·4 measures’, which are considered as supply plans, are representative. The 5·6 measure is to supply 70,000 homes in Seoul and more than 250,000 homes per year in the metropolitan area after 2023. It plans to utilize maintenance projects (public redevelopment) that reinforced publicity, semi-industrial areas, public lands, and 3rd new cities.

In the August 4th measure, the supply plan was more detailed. In Seoul, the housing supply plan was disclosed to the site of Taereung CC (Taereung Golf Course), Yongsan Camp Kim, Western License Test Center, and Myeonmok Administrative Complex Town. Following public redevelopment, it was decided to promote public redevelopment, and to increase the housing scale by raising the floor area ratio of the third city.

Although the government has announced plans to expand housing supply, the market is not expecting much. This is because the supply schedule will be unclear and difficult to feel right away. The plan to supply 90,000 homes to the city center through public redevelopment and public redevelopment is also likely to be in vain. Although the floor area ratio is increasing, the rate of donations is high, and the number of rental housing units increases, which is why members are reluctant. Although a pilot project was recently conducted, none of the reconstruction sites of the Seoul Grand Complex participated.

In the second half of this year, the housing market became seriously unstable. At the end of July, when the second law of the lease law introduced at the end of July (the right to apply for contract renewal, the jeonse limit system), introduced at the end of July for the stability of tenants’ housing, was implemented, the chartered property was scarce. As the sale was shortened and the landlords reflected the four-year rent in the market price, the jeonse price soared. As end-users, tired of the jeonse crisis, bought mid-to-low-priced items outside of Seoul and Gyeonggi-do, the prices of houses in these regions jumped.

In response to the rise in house prices triggered by jeonse unrest, the government tried to stabilize it with the ’11-19 pre-generation policy’. It plans to supply 114,000 public rental housing units by 2022. Vacancy houses owned by public institutions, hotel/office remodeling, and purchase rentals are utilized.

Despite the government’s response, the observation that housing insecurity is difficult to resolve in a short period of time is predominantly due to locational limitations, poor living conditions, and supply of single-person households.

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