Recently, Seoul's housing prices have experienced a bumpy swing, with some even boasting a staggering 30% drop. As a result, many people began to assert that the real estate market in South Korea has finally reached its final moment.
However, South Korea's current real estate crisis is very similar to China's current real estate woes.
Although the bursting of the bubble is inevitable, it is too early to say that it bursts today.
1. Review
In order to better understand the logic of the rise and fall of the Korean real estate market, we first need to review its development history.
From 1960 to 2000, South Korea's real estate market was in a relatively stable state of development. At this stage, the property market is affected by policy, economic and other factors, but on the whole, its upward and downward trend is relatively flat.
However, after entering 2001, the Korean real estate market began to take a new turn. At this stage, the property market products in the market began to become more diversified, and many ** real estate projects also emerged. As time goes on, house prices begin to show a trend, and the increase is expanding day by day.
So, what exactly are the factors that have influenced the rise and fall of the Korean real estate market?
First of all, the policy factor is a very important factor. **Policy adjustments, changes in financial policies, etc., will have a direct or indirect impact on the real estate market. Secondly, economic factors are also very important. When the economy is doing well, people's income levels increase, and the demand for housing increases accordingly, which drives house prices**. In addition, social factors, demographic factors, etc., will also have a certain impact on the real estate market.
Going back to the Seoul housing price ** incident, I don't think it necessarily means the collapse of the entire Korean real estate market. Housing prices** in Seoul may be due to specific factors, such as policy adjustments, changes in the financial environment, etc. Moreover, the ** of house prices does not represent a total collapse of the real estate market.
In the course of the development of the Korean real estate market, alternating ups and downs are the norm. The same is true of many countries in the world, including socialist China.
Overall, the rise and fall of the Korean real estate market is influenced by a variety of factors. Although the bursting of the bubble is inevitable, its bursting is not a simple event, but is complexly affected by a variety of factors. Therefore, when looking at the Korean real estate market, we need to analyze various factors comprehensively and in-depth, rather than simply asserting its collapse.
Blindof the citytownChemistry
We often say that real estate looks at population in the long run, land in the medium term, and finance in the short term. In this regard, we can start with the long-term concept of population. In the 60s of the last century, South Korea was poor and backward, and after Park Chung-hee came to power, he took economic development as the country's top priority. After careful consideration, he decided to adopt an export-oriented strategy and established the Seoul-Incheon Industrial Zone, which began the industrialization process in South Korea.
Industrialization and urbanization went hand in hand, and as a result, South Korea's population gradually concentrated in the metropolitan area, including Seoul, Gyeonggi Province, and Incheon. With the rapid development of the Korean economy, especially since the 70s, new industries such as steel, automobiles, shipbuilding, electronics, and home appliances have emerged, and the population of the metropolitan area has been moving at an accelerated rate. From 1960 to 1990, the population of the metropolitan area grew by 13.38 million, an average annual increase of 4460 thousand.
In addition to the large number of new citizens moving in, South Korea's fertility rate has also played a role. Between 1950 and 1960, Korea's total fertility rate remained high at around 6, which undoubtedly accelerated the rapid population growth of the metropolitan area. However, in the 60s, South Korea's total fertility rate began to fall off a cliff** and did not plateau until 1985.
This rapid growth continued until 1992, when Seoul's population reached 11 million. However, starting in 1992, the population of Seoul began to decline slowly, but the population of the entire metropolitan area continued to grow. Today, the metropolitan area, which accounts for only 12% of the country's total land area, is home to 26 million people, accounting for half of South Korea's total population, and its economy accounts for more than 70% of the country's total economy. Therefore, we can call South Korea a "semi-city state".
The high concentration of population and economy in the metropolitan area is the basis for understanding the Korean real estate market.
2. South Korea's property marketThree big gainsSpawned today's housing bubble
Let's return to the land issue. With such rapid urbanization, it is only natural that the demand for housing is becoming increasingly tight. However, Park Chung-hee** did not focus too much on the housing issue in the early days, but focused on economic development. It's like a person building a grand building and neglecting the foundations of the foundation.
South Korea's land system follows Japan's example and takes the form of a high degree of privatization. Private land occupies a staggering 768%, * usually without the right to expropriate. That's a staggering percentage, and only 60 percent of the land in the United States is privately owned. Seeing this situation, the landlords have covered up and are reluctant to sell, and the investment of the first is insufficient, and the strength of state-owned enterprises is limited, so they cannot carry out large-scale development.
This led to the first wave of housing price growth in South Korea. In 1969, housing prices in Seoul were a staggering 84 in a year7%。This increase is simply like a brilliant firework, gorgeous and short-lived. Other cities experienced similar growth, with national house prices rising sevenfold from 1965 to 1969, with an average annual increase of 385%。
The runaway property market even led to a riot of 50,000 people in Gyeonggi Province in 1971. Park Chung-hee, who has always been known for his iron will, had to bow his head and apologize to the people. He launched the first Comprehensive Plan for Land Development that year,17Of the 4 trillion won invested, 40% was used to build housing, and with the outbreak of the oil crisis, housing prices cooled down for a short time.
However, the contest between the laws of economics and the will of the individual always seems so insignificant. The industrial boom brought a large number of people to the Tokyo metropolitan area, and at that time, the construction of mainly detached houses, the land utilization rate was low, and the housing supply rate was still low. With only 56% of the housing supply in Seoul and 60% in the entire metropolitan area, housing is still in high demand, and the Korean property market is like a torch that has been lit and may cause new fires at any time.
A few years later, South Korea's infrastructure companies made a lot of crooked fortunes overseas, and they backhanded the newly settled project funds into the property market, which triggered a second round of skyrocketing housing prices. From 1970 to 1978, housing prices rose sevenfold in just eight years, but CPI only doubled. In the 80s, Chun Doo-hwan (1980-1988) issued a decree in 1981 to solve the problem of housing shortage, allowing ** to purchase undeveloped land and farmland on the outskirts of the city, so the supply of housing began to accelerate. But he was unlucky, coinciding with the period when the number of people moving in was at its highest, and a few years later, stimulated by the 1988 Seoul Olympics, housing prices began to rise sharply for the third time.
Roh Tae-woo (1988-1993), who peacefully took over the ruling power from his predecessor, saw that the situation was about to get out of control, and hurriedly issued a decree allowing ** to requisition private land for the first time to build houses, which opened the door to the roots. Since 1988, 2.7 million new homes have been built in South Korea. After 1993, 3.12 million new homes were built, and most of them were high-rise apartments, and with urbanization coming to an end, housing prices in South Korea finally began to stabilize after entering the 90s, and turned into a low ebb after the financial crisis of 98.
It can be seen from the sharp rise in housing prices in South Korea in the first three rounds that due to the serious lag in private ownership of land and housing construction, there is a permanent shortage of houses in the country, especially in the capital area, which has led to housing prices getting out of control again and again.
But at this stage, the main purpose of the house is still to live.
What really pushes Korean real estate to the point of no return is not real estate but finance – all-rental.