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It has been diagnosed that there is a risk of a house price bubble, mainly in areas where house prices have recently risen, such as Seoul and Sejong. Such an argument came from a government-funded research institute.
An Italian deputy research fellow at the Real Estate Market Research Center of the Korea Institute of Land, Infrastructure and Transport, said in National Territory Issue Report No. 34 that the risk of bubbles in the housing market in major cities around the world is expanding after the global financial crisis.
In detail, as a result of estimating the house price bubble indices of major cities in Korea using the global bank UBS’s real estate bubble index calculation formula, the bubble indices of Seoul and Sejong were measured at 1.54 each as of last year. If the number of embroidery exceeds 1.5, there is a risk of bubble, 0.5 to 1.5 are considered to be overvalued, -0.5 to 0.5 are considered appropriate, and -1.5 to -0.5 are considered to be undervalued.
In Seoul, the bubble index fell slightly last year from 1.60 in 2019. In Sejong’s, the bubble index rose from 0.86 in 2018 to 1.05 in 2019 and 1.54 last year. On the other hand, regions that were undervalued as of last year were Jeonbuk (-1.25), Gyeongbuk (-1.06), Gyeongnam (-0.95), Chungbuk (-0.71), and Chungnam (-0.55).
Researcher Lee analyzed that the causes of the rise in global housing prices vary depending on the situation in each country, such as low interest rates, increased liquidity, lack of housing supply, inconsistency in supply and demand, and inflow of foreign capital, but low interest rates and abundant liquidity are common factors. In the post-corona era, he predicted that there is a possibility of raising the standard interest rate to stabilize prices and stabilize the housing market following the economic recovery, and suggested that preemptive measures should be reviewed to reduce the risk of housing finance consumers.
/ Reporter Jin Dong-young [email protected]
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