사진 확대 Editorial Writer Seo Chan-dong
Korea is walking on a path that has never been before. The KOSPI market capitalization exceeded KRW 6,000 trillion, and Samsung Electronics’ labor and management began last-minute negotiations over the “15 percent bonus in operating profit.” Next, automobile, shipbuilding, and information technology (IT) companies are waiting for their turn. Several trillion won is not the name of anyone’s family’s child, but all the money units that are being talked about these days are “trillion won.” The greater the weight, the more difficult it is to know how the flow of money will sweep our economy. However, the Seoul apartment market, which first smelled money, turned upward in both sales and monthly rent. This is why the stock market boom and the aftermath of incentives are unstable.
Let’s look at a recent report by the Bank of Korea called “Evaluation of Stock Asset Effects.” The bottom line is that the money obtained from the domestic stock market tends to flow to real estate. In the case of homeless people, it was estimated that 0.7 won leads to an increase in real estate assets with a time lag of about one year when one won of stock capital gains occurs. Even if it is not a Bank of Korea report, many people will know it as a “learning effect.” The stock market boom is a leading indicator of a rise in housing prices. When the money earned from stocks flows to real estate, “lion demand” increases and pushes up housing prices. The same goes for homeowners as well as homeless people. As financial assets increase, the demand to transfer to higher-end and high-priced houses becomes stronger. If the economic growth rate is added, it is recognized as a sign of economic recovery, and expectations for buying are higher.
Just in time, the Korea Development Institute (KDI) drastically raised its growth forecast for this year from 1.9% to 2.5% due to booming semiconductor exports. Most economic indicators such as domestic demand, facility investment, and construction investment are expected to improve from the previous year. However, the housing supply is already insufficient, and the sale price continues to rise due to the rise in raw material prices. Factors that drive up housing prices are building up one by one. Of course, regardless of its appropriateness, the government also has the means to put on a brake. It is also possible to restrict stock funds from flowing to real estate by mobilizing loan regulations, reorganization of ownership tax, and interest rate hikes.
The president said on social media, “There is no real estate undefeated myth,” but the demand for housing may not just be due to faith in the myth. In fact, over the past decade or so, the expected return on domestic housing has been 0.20% per month, more than double that of stocks at 0.09%. Compared to large overseas cities, few places have a higher rate of increase in housing prices than Seoul. According to the Organization for Economic Cooperation and Development (OECD) statistics, the average housing price in 1995 has risen 480% in London, 420% in LA, 380% in New York, 310% in Paris, and 85% in Tokyo over the past 30 years. However, Seoul is overwhelmingly high at 550 percent. In particular, apartment prices in Seoul soared by 680 million won on average over the five years of the Moon Jae In administration, and 1.38 billion won in the three Gangnam districts alone. Seeing it as a “reasonable choice” rather than following “myth” is helpful in establishing housing policy.
The combined operating profit of Samsung Electronics and SK Hynix is expected to surge from 91 trillion won last year to 630 trillion won this year and 906 trillion won next year. In a few years, the two companies’ incentives alone may exceed 100 trillion won. If you compare the amount, Songpa Helio City, the number one high-priced apartment complex in the country, is about 23 trillion won. Raemian One Bailey and Acro River Park in Banpo-dong, a high-priced apartment neighborhood, are also worth less than 20 trillion won each. This means that incentives for large corporations can buy most apartment complexes as a whole. Silicon Valley in the U.S. clearly shows the relationship between incentives for large corporations and house prices.
In the end, in order to beat the “real estate undefeated myth” in the long run, stock market returns must outpace real estate. At the same time, sufficient housing supply must be made. I hope the government will make greater efforts. Before the stock market boom and performance-based bonus party write another “unbeatable myth.”
[Seo Chan Dong, Editorial Writer]