The most sincere house purchase advice, restore the truth of the property market
In 11 months, house prices plummeted by 40 percent, millions of banks cut off supplies, and many tenants were forced to commit suicide.
This is not a nightmare, but a reality.
South Korean house prices have fallen for 11 consecutive months, and some apartments in Seoul have fallen by 30%-40% of their peak, and the transaction volume has fallen by more than 70%.
The homeowners who took over the high-ranking position woke up in the morning and found that their assets had evaporated by hundreds of millions of won. South Korean property developers are offering gold bars and Mercedes-Benz to buy houses.
But there is still no one to talk about.
Although house prices have fallen, interest rates have risen, and the burden on homeowners with huge mortgages continues to increase. There is no other way but to endure the pain of selling your home at a low price, or run away.
South Korea's real estate collapse is far more tragic than expected.
When Moon Jae-in left office, he said that the biggest regret during his administration was that he could not control the rise in housing prices, and Yoon Seok-yue came to power and did nothing, and housing prices fell sharply.
Systemic financial risks are imminent.
Afraid of becoming a historical sinner, Yin Xiyue almost overturned all previous real estate restrictions and even ran to the beautiful country to intercede.
But is the beautiful Congress that cares for itself because South Korea is considering its own pace of interest rate hikes? No.
Cause and effect, greeting Korean real estate is likely to be a long night, and a slight carelessness on the edge of the cliff will fall into a lost thirty years like Japan back then.
So how did all this happen, and what kind of real estate logic is reflected in Korean real estate? It's worth thinking about.
01
In the global real estate market, the two most demon places are Hong Kong, China, and Seoul, South Korea.
In terms of the height of housing prices, Hong Kong cannot be climbed, but in terms of the power of house speculation, South Korea is unrivaled.
After the Moon Jae-in government came to power in 2017, it launched 18 mega-real estate control policies, and the last one can be called a historical master——
Strengthening the collection of real estate taxes on high-priced residential properties; Banks and other financial institutions will be prohibited from providing financial loans to homes with a market value of more than 1.5 billion won (about 9 million yuan) in areas where real estate speculation is overheated.
However, the result is that the whole country continues to rise sharply, especially in South Korea's "rich area" with an average house price of 150,000 / square meter, Seoul's Gangnam district, where house prices soared by 20-30% overnight.
Why do Koreans like to buy houses as much as they smoke marijuana?
This brings us to Korean characteristics.
In South Korea, banks are basically reluctant to lend to young people to buy houses, and the government wants to solve the housing needs of young people, so in the 70s, a new model was invented -
Free rental, also known as full rent.
The tenant pays a certain percentage of the security deposit to the landlord, generally 50-80% of the house price, and then can rent the house for free, generally for 2 years, after the expiration of the tenant to check out, the landlord returns the deposit in full.
The landlord is very loss-making on the surface, but in fact he is very profitable, and he can invest the tenant's security deposit to do business, which will be more than the rental income.
At the beginning, it worked very well, renting a room, mutually beneficial, forming a new steady state.
But gradually something was wrong.
After 2000, the Korean economy began to decline, under the chaebol system, there were fewer and fewer profitable businesses, and landlords could not find a way to invest, so they could only go around investing in real estate.
As for one person, so for 10,000 people, South Korea's housing prices began to skyrocket, and the money-making effect of real estate has prompted more and more landlords to get involved in the market.
Driven by interests, landlords began to go crazy, using the tenant's deposit as a down payment to continue to buy real estate, two lives two, two lives four, four lives eight.
Banks are also happy to lend money to the rich, taking low-interest loans at will, so that Seoul's housing prices have gone all the way up.
02
Interestingly, the beautiful country far away has also contributed to the bursting of the Korean housing bubble.
This is determined by South Korea's economic system.
South Korea is a typical import and export country, and its foreign trade dependence is above 90% all year round.
Under the global trading system established by the beautiful country, the Korean financial market is highly open to the outside world, and the won is forcibly pegged to the US dollar.
This means that the United States cuts interest rates, South Korea must cut interest rates, the United States raises interest rates, South Korea must also raise interest rates, in order to balance the exchange rate and avoid being cut.
During the epidemic, the barbaric printing of money in beautiful countries caused global inflation, South Korea followed closely, and hot money printers worked overtime day and night.
Banks are willing to give landlords cheaper money, but they are also willing to lend money to tenants and rent better houses.
It used to be that going to Seoul to rent an apartment of 5 million yuan would cost more than 5,000 yuan a month, but now you only need to pay interest every month, which is equivalent to 1/4 month rent, and you can get a full rental house.
As a result, more and more landlords and tenants have joined the hype.
From 2017 to August 2022 alone, house prices in Seoul, South Korea, rose by as much as 87%, reaching a maximum of 150,000 yuan per square meter.
By the end of 2022, the scale of South Korea's heirloom loans had reached 1,058 trillion won, equivalent to 50% of South Korea's national GDP.
The house speculation group is even more exaggerated, with landlords who have hundreds or even thousands of houses in their hands, and more than ten landlords who own more than 3,000 properties throughout South Korea.
All false hype will eventually be extinguished.
The day still came.
03
On March 16, 2022, the Federal Reserve implemented the first rate hike of this cycle of interest rate hikes, and global capital markets were turbulent, and overnight, capital began to rapidly withdraw from South Korea.
Immediately afterwards, the Bank of Korea simultaneously launched a rate hike, and the real sword of Damocles hit the top of the market.
The interest rate hike directly led to a rapid increase in borrowing costs, and tenants paid the bank interest more than the rent of normal rents, so they began to refuse to renew the lease on a large scale.
But the problem is that before the market was good, you didn't rent others, but the epidemic was turbulent, housing prices soared, young people were overwhelmed, and more than 3.4 million people "fled" Seoul in the past six years.
The landlord raised his knife and looked around at a loss, unable to see a takeover man.
At this time, the tenant's deposit was used to buy a house with a down payment, and in order to pay off the debt, he could only be forced to sell the house.
As a result, landlords sold and the stampede effect of the property market appeared.
A landlord with a conscience, selling assets and carrying it back, a speculator who can't bear it without a conscience, runs away directly.
Many young people cannot get their deposits back and have to repay bank loans. The family of six purses, changed a bubble, broke down, and walked to the rooftop.
Some people say that the collapse of South Korea's real estate stems from the tidal harvest of a beautiful country, but after reading the above, you should understand that it actually stems from the South Korean government's loss of control of the market——
Connivance at speculators to change the rules of the game, conniving at unfair treatment and brutal lending by banks, and conniving at capital to guide the people to speculate on houses, behind this is the social system's deprivation and deception of the middle and lower classes.
As Moon mentioned in his last speech:
"Ordinary people feel a strong sense of deprivation, and the government is exploring a number of countermeasures and has submitted bills to Congress, and will work until the last minute."
However, after trying, is it useful?
An old friend who settled in South Korea told me that young Koreans really work hard and even evolved sleep in order to find a balance between work and life, and each person only sleeps about 4-5 hours a day.
People can't afford to buy a house or get married, single-person families have reached 30%, and the fertility rate has fallen to 0.78, or even lower.
The people at the bottom desperately want to squeeze into the top, but the rules set by the chaebol system have once again repelled their ideas.
The bursting of the all-rental bubble may be the last straw that overwhelmed young people.
A girl named Park Hee-soon, after committing suicide by taking medicine at home, in addition to accusing the all-rental scam, there was also a 60,000 won water bill reminder.
When this reminder was exposed on the Internet, countless Korean young people were teary-eyed, and the highest praise translated into Chinese:
Go TM's.
When the upward desire of young South Koreans disappeared completely, the South Korean economy collapsed like a locomotive full of rust.
A few days ago, South Korea's chaebol leader Samsung Electronics announced that its total operating profit in the first quarter of 2023 was 640.2 billion won, down 95.8% from 14.12 trillion won in the same period of the previous year. Net profit was KRW 1.57 trillion, down 86.1% year-on-year.
This is Samsung Electronics' first quarterly net profit decline since the fourth quarter of 2007, and it may also be the real beginning of the decline.