According to the real estate industry on the 25th, experts who believe that a bubble in real estate prices has not yet formed speak on the grounds that △there is still a lot of demand △the supply is insufficient △the current real estate policy stance is likely to be maintained.
① There are still many people who want to buy a house
Recently, as the buying trend has started to continue, including in Seoul, house prices are rising again. Despite the government’s successive real estate regulation policies, buying sentiment is reviving.
In fact, even though house prices have risen a lot in Seoul, the apartment purchase advantage index continues to rise. It means that there are more people who are willing to buy a house than are willing to sell it. According to KB Kookmin Bank’s weekly apartment price trend, as of the 21st, the Seoul apartment purchase advantage index rose 2.4 points (P) from the previous week (109.9) to 112.3. It has risen without hesitation after crossing the baseline (100) in three months at the end of last month. Gyeonggi-do recorded a purchase advantage index of 112.5, which was higher than that of Seoul.
Joon-seok Ko, adjunct professor at Dongguk University’s Graduate School of Law, said, “It is possible to judge whether a bubble has formed in the housing price when supply and demand in the market match.” It is difficult to do,” he said.
② Shortage of housing supply continues
The fact that the number of apartment occupants nationwide from next year will decrease significantly is often suggested as a reason that is difficult to say as a bubble. According to Real Estate 114, the total number of apartments in the country next year is 265,594. This is 73.5% of this year’s occupancy volume (36,1320). In 2022, the number will decrease to 23,9396 households.
In Seoul, the number of occupants declined more rapidly. This year, 4,8758 apartments in Seoul were occupied, but next year it will be cut in half to 26,940. By 2022, it will drop sharply to 16,920 households.
According to the rule of supply and demand, the supply of houses decreases, and when demand is high, prices rise. Because of this, there are opinions that the collapse of the bubble, in which housing prices suddenly decline, will not occur for the time being.
Sim Gyo-eon, a professor at Konkuk University’s real estate department, said, “Prices move according to the supply and demand of housing.” He said, “There may be a short-term correction as there is a side that is excessively right than actual demand, but it will be difficult to see a situation where the bubble is bursting.”
③ It is highly likely that the current real estate policy stance will be maintained.
Another reason is that the government’s real estate policy will not change. The candidate of the Minister of Land, Infrastructure and Transport Byeon Chang-heum is promoting public lease and public self-owned housing as the main housing supply. Public private housing combined with land lease or redemption conditional housing and public rental housing where the government buys an existing house or a private house to be built in advance by the government and supplies it for lease are being discussed.
In the end, there are many experts who believe that the real estate market situation will remain the same as the current real estate policy will not change significantly even if the minister is changed. Kim Hak-ryul, head of the Smart Tube Real Estate Research Institute, said, “The supply policy mentioned by Candidate Chang-Hum Byun is mostly rental housing, so it will not have an effect on the stability of the house price.” I think I can do some adjustments.”
Seo Jin-hyung, chairman of the Korean Real Estate Association (Professor of Kyungin Women’s University) also said, “I think the new minister’s term of office is short to bring stability to the existing housing market as we focus on the return of public rental apartments and development profits.” “Only if we focus on rental housing and release regulations so that the rest can be supplied by the private sector, we will be able to make changes to stabilize house prices.”
◇’Bubble’ when looking at interest rates and housing expenses
On the other hand, some experts believe that the rapidly rising house prices have already entered the bubble stage. They say △ interest rates are rising △ the PIR index is increasing △ the jeonse crisis is further stimulating the wagering price.
① Interest rates are rising
The Bank of Korea’s standard interest rate has been maintained at 0.05% per year for 7 months under the global’zero interest rate’, but the interest rate for domestic bank loans is on the rise.
Shinhan Bank’s variable interest rate (COPIX, new standard) cheonsei fund loan interest rate was from 2.42% on the 20th of last month to 0.09%P as of the 4th of this month, and the interest rate on the main charge (home mortgage loan) is from 2.40% to 0.05%P, credit loan Rose from 1.88% to 0.12%P respectively.
Go Jong-wan, director of the Korea Asset Management Research Institute, said, “Considering that the loan interest rate is rising and the housing price is deviating from the average line compared to the intrinsic value, it is the time when the house price bubble is growing”. “Next year, even if the house price continues to rise and the base rate rises a little “I am very concerned because there is a possibility of explosion.”
② The PIR index is rising
The reason for the bubble is that the period for buying a house by collecting all of the income has increased as the house price surged in the third quarter of this year. According to KB Kookmin Bank’s Liveon, the housing price (PIR) to income of households in the third quintile in Seoul (2 or more people, urban households) in September was 15.6, the highest since the survey began in 2008.
PIR, which is used as an indicator of the burden of housing expenses, is a value obtained by dividing the price of a house by household income, and it refers to the period during which a household can buy a house when it is collected without spending a dime. The higher the number, the more difficult it is to get my home, which is considered one of the indicators of whether the price of a house is a bubble.
Park Won-gap, a senior real estate expert at KB Kookmin Bank, said, “It is obviously irrational overheating that’panic buying’ has raised housing prices relative to income as it passed from 30s to 20s.” did. He said, “It’s a dangerous idea to have a blind faith in the idolatry of house prices, which is widespread among young people.”
③ There is a side that provoked the price of cheonsei difficulties
One of the reasons experts see it as a bubble is that, as demand for mid- to low-priced homes increases amid the jeonse crisis, it is pushing up the sale of apartments in Seoul, the metropolitan area, and other regions. According to the Korea Real Estate Agency, in the third week of December, the nationwide apartment price and rental price rose 0.29% and 0.30%, respectively.
This week’s rate of increase in trading prices was the highest in 8 years and 7 months since May 2012, when the Korea Real Estate Agency began publishing these statistics. The jeonse price also rose 68 weeks in a row while maintaining the increase (0.30%) last week, while Seoul (0.14%), which has continued to lack sales compared to real demand, has risen for 78 consecutive weeks.
As the cheonsei crisis intensifies, the cheonsei amount has risen excessively compared to the actual value, which means that the price of the house has also increased. This means that an abnormal factor is included in the price.
“The price of apartments has risen to the outskirts of Seoul, including Gangnam, and the overall housing price bubble is occurring, especially in Seoul,” said Dr. Jong-Wan Go. “There is a high possibility that rental prices and house prices will rise next year due to a shortage of supply. If this comes and eventually bursts, there is a risk of a collapse.”