“The atmosphere overflows even for 100 million per pyeong”… ‘Gangnam Imperial Family’ certificate given by the civil government

“Where do you live?” You can think of it as a question that has nothing special. However, you should be careful because the other person can accept it as’what is your status?’ This is because, as the asset gap widens due to the polarization of the housing market, the world has become a world where’where you live and how you live (self-ownership)’ is a class (class). On the Internet, you can easily find a schematic diagram of the real estate class. Depending on where they live (by their own standards), they are divided into royal families, central nobility, local families, middle families, and commoners.

The royal family is by far Seocho and Gangnam-gu, Seoul. The ranks are also divided within the Imperial Family, and at the peak (Grand Master in the rank chart) are Hyundai Apartment in Apgujeong-dong, Gangnam-gu and Acro River Park Apartment in Banpo-dong, Seocho-gu. Such a real estate class has existed in the past, but it has strengthened with the introduction of the Moon Jae-in administration. At the same time as the launch in 2017, various regulatory measures proposed to set the’Gangnam house price’ increased the scarcity of Gangnam apartments and encouraged non-Gangnam residents to panic buying.

According to the Korea Real Estate Agency, apartment prices in Seoul in the second week of January (as of the 11th) rose 0.07% from the previous week. Gangnam 4 districts (Seocho, Gangnam, Songpa, and Gangdong-gu) soared, and the rise was larger than that of Jeonju. Seocho-gu and Gangnam-gu increased 0.1% from Jeonju, and Songpa-gu increased 0.14%. Reported transactions have been lined up here since the beginning of the year. Apgujeong-dong, Gangnam-gu, 144.2㎡ (the exclusive area) was traded at 3.97 billion won on the 31st of last month, and 82.23m2 of the same dong Hyundai 5car was traded at 2.97 billion won on the 28th of last month, breaking a record high. This is because the prices of apartments in Gangnam seem relatively cheap as the prices of houses in Seoul, metropolitan areas, and other regions have soared due to the balloon effect. This is the so-called reverse balloon effect. An official at the Banpo-dong Barun Real Estate Agency said, “A new apartment, such as Accro River Park, costs 100 million won per 3.3㎡, but there is a lot of demand for waiting.”

“Gangnam is the pinnacle of the real estate class”

The government has constantly waged a’war with Gangnam’ over the past four years due to regulations on reconstruction, reduction of loans, and strengthening of transaction and holding taxes. However, as the whole country is tied up as a regulated area, funds are again being flown into major apartments in Gangnam, Seoul. The reason why apartment prices in Gangnam are not caught despite all-round pressure is due to excessive demand. Gangnam was a wasteland half a century ago, but today Gangnam is the most well-equipped economic, educational, transport, cultural and commercial infrastructure in Korea. Gangnam, which naturally became a wealthy village thanks to this environment, is a brand and premium. It means that the fact that you live in Gangnam in Korea gives you a lot of symbolism. Therefore, no matter how much we suppress demand, demand increases and prices rise. Kwak Geum-ju, a professor at Seoul National University’s Department of Psychology, said, “There is a widespread sense of anxiety that we may miss opportunities if we regulate or if prices rise.” It’s the same,” he explained.

The field in which anxiety psychology works the most is education. Gangnam is home to a prestigious high school called’Gangnam 8th School District (Seocho, Gangnam-gu)’, and Daechi-dong, Gangnam-gu is called the No. 1 private education. According to Lee Gwang-jae’s Office of the Democratic Party, Seocho-gu had the highest number of students enrolled at Seoul National University per 1,000 high school students as of 2019, followed by Gangnam-gu with 27.1. It is common for children to stay in Gangnam, paying more rent than regular workers for education. Dr. Jang Ho-seung, who lives in Daechi-dong A apartment for a monthly rent of 6 million won (a deposit of 700 million won), said, “The first two high school students and the second middle three will live in Gangnam until they go to college.” In December of last year, a contract was signed for a private house in Banpo-ri in Banpo-dong, Seocho-gu, for a total of 2,185 million won. It is the highest price among the 84㎡ reported in Seoul. The president of a real estate agency in Banpo-dong said, “The higher the rent, the more’their league’ where only those with economic power can live. In Gangnam, this desire becomes another attraction and creates new demand.” Said.

Some predict that the government’s policy to abolish special high school and self-accidents will strengthen this atmosphere. Although they have been distributed to special high schools and self-accidents across the country, there are many prestigious general high schools and there are concerns that the private education market may be concentrated in Gangnam. The Korean Federation of Teachers’ Associations said, “If parents are distracted by Gangnam due to the policy to abolish self-accidents, Gangnam 8th School District can re-appear.” Is the position. Like the Moon administration, the Roh Moo-hyun administration, which fought a war against’Gangnam house prices’, pushed for a school district adjustment in 2005 to neutralize the Gangnam District 8 (as a result, the high school selection system was implemented in 2010).

There are also plenty of jobs in Gangnam that suck up the demand for housing. The number of businesses is the largest in the country, and the headquarters of 500 companies based on sales are concentrated in Gangnam 3 districts (106 locations) including Songpa-gu. One-third of the top 500 CEOs also live in Gangnam 3 district. The autonomous district with the most SMEs in Seoul is also Gangnam-gu (68,060 as of 2017). Of course, economic power is high as companies and jobs are concentrated. Gangnam-gu’s gross regional product (GRDP) was ranked first at 65 trillion KRW in 2017. The difference from the second place Jung-gu was 14 trillion won. Seocho-gu was 33,772 billion won, and Songpa-gu was 26.816 billion won.

Market stability should be continuously developed as an alternative to Gangnam

It is analyzed that the reason that the Moon administration lost the war against the Gangnam house price was largely due to the overlook of the needs of the people and the characteristics of Gangnam. High-ranking officials in the Moon administration did not understand it well or did not try to understand it. On September 5, 2018, Cheong Wa Dae’s policy director Jang Ha-seong said in a radio interview about the unstable housing price in Gangnam, “There is no reason for all citizens to live in Gangnam. I know because I have lived.” In May of the following year, when the then Minister of Land, Infrastructure and Transport, Kim Hyun-mi, announced plans for the construction of the third new city in the metropolitan area, he asked, “Do you like Gangnam? One real estate expert pointed out, “It is a natural outcome to lose, as the people involved in the housing policy went to war without reading the people’s desire for a better educational environment and a better life.”

The Moon administration also failed to block demand, but the demand suppression policy only increased the scarcity of Gangnam apartments. The ban on loans for houses exceeding 1.5 billion won also spread anxiety. In the midst of this,’class inheritance’ or’class succession’ through inheritance or gift followed the line, and panic buying intensified. From January to October of last year, 5,726, 30% of the 11,108 donations of apartments in Seoul were made in Gangnam 3 district. The child inherited the class of parents who are’royal’. Professor Shim Gyo-eon of Konkuk University’s Department of Real Estate said, “The so-called inheritance of wealth is a factor in reducing sales in the market and a driving force behind panic buying.”

Unlike the Roh Moo-hyun administration, which fought a’war with Gangnam’ prior to the Moon administration, it is pointed out that it was defeated that it did not use the’demand dispersion policy’. At the same time as Roh took office in 2003, he started a war with Gangnam, saying, “It is said that Gangnam is unbeaten, and as far as the president is concerned about that matter, too” At the same time as President Roh started the reconstruction regulation, he promoted the construction of new cities in Wirye, Pangyo, Gwanggyo, and Dongtan, with good accessibility in Gangnam. They saw that there was a limit only to suppress demand, and started to build a new city that could replace Gangnam. On the contrary, the Moon government announced a plan for the construction of a new city for the 3rd term after 3 years in power, saying “the supply is sufficient” and only suppressing demand.

Experts contend that there is an opportunity to pay for a house in Gangnam only when the concentration phenomenon in Gangnam is resolved. However, the current situation is the exact opposite. The metropolitan metropolitan express train (GTX) alone was designed to go through Gangnam to disperse demand in Gangnam, but there are voices that it can further strengthen the’centralization of Gangnam’. When expressways and high-speed rails are opened, there is a concern about the so-called’straw effect’ that large cities absorb the population and economic power of neighboring small and medium-sized cities. A typical example is the concentration of population and economic power in Tokyo and Osaka, the metropolitan cities of Tokyo and Osaka, when the Japanese high-speed rail Shinkansen was built in the 1960s. Kim Hak-ryul, head of the Smart Tube Real Estate Research Research Institute, said, “There is a chance to win only if we continue to develop alternative residential areas comparable to Gangnam and disperse the needs concentrated in Gangnam.”

There are voices in the market that the supply of housing in Gangnam should also be steadily expanded. At the same time as developing alternative residential areas, it is necessary to increase supply in Gangnam, where housing demand is high. In Gangnam, there is no land to build, so there is virtually no supply method other than reconstruction. However, due to layered regulations, the reconstruction project has actually stopped. The government is looking forward to public reconstruction, but there are few Gangnam reconstruction complexes that have announced that they will do public reconstruction. KB Kookmin Bank’s senior expert real estate expert Park Won-gap emphasized, “We need to plan meticulously from a long-term perspective rather than to regulate what is in front of us to ensure continuous supply.”

Reporter Hwang Jung-il [email protected]