Housing Prices Keep Rising Despite Interest Rate Hikes, Why?

The South Korean real estate market experienced a brief downturn in 2022 and early 2023 but began to rebound from mid-2023.

This recovery saw a 5% increase in 2024 and a high 9% increase in 2025. The 2026 figures, currently being compiled, are also expected to exceed last year's growth.

There's an example where the loan-to-value (LTV) ratio, which was 70% when an individual purchased a home, significantly decreased to about 30% in just three years.

This indicates a substantial increase in housing prices and suggests that an individual's actual asset size has grown considerably even without principal loan repayment.

This decline coincides with GDP growth fueled by the semiconductor industry boom, raising expectations that the target of 80% by 2030 could be achieved earlier.

The current domestic real estate market faces persistent supply shortages and a 'jeonse' (lump-sum deposit) crisis, and the semiconductor industry's overwhelming performance is generating enormous profits, making it difficult to find domestic factors that would cause housing prices to fall.

Consequently, the possibility of a housing price decline is analyzed to be confined to unpredictable external crises rather than domestic variables, such as war, global financial market collapse, or the bursting of the artificial intelligence (AI) industry bubble.

As long as these external variables do not occur, the prevailing assessment is that current domestic economic conditions contain more factors supporting price increases than decreases.

South Korea's national income is surging unprecedentedly due to the boom in key industries like semiconductors, and the trade balance is also recording an all-time high, strengthening the national economy's fundamental health.

In a situation where a company that once earned 50 trillion won now earns 500 trillion won, it is logically contradictory to expect a massive increase in national wealth and a simultaneous decline in asset prices.

This trend is very similar to the indicators during the 2020 'jeonse' crisis, suggesting that 'jeonse' price increases and the resulting upward pressure on purchase prices are likely to intensify in the future.

In rapidly changing economic situations, it is crucial to accurately analyze reality based on objective data rather than relying solely on news articles.

It must be remembered that in a period of abundant liquidity like the present, if individuals, whether homeowners or not, fail to actively protect and grow their assets, they will inevitably face economic difficulties.