Triple Surge in Rental, Lease, and Sale Prices Expected to Continue

Sonpumwang projected that this phenomenon might continue for some time.

Supply shortage is cited as a major cause. The simultaneous rise in prices across all three market segments reflects structural problems throughout the housing market.

The decisive reason why interest rates do not influence housing prices as much as in the past is the overwhelmingly high proportion of fixed-rate loans.

Since the latter half of 2022, the proportion of fixed-rate loans among mortgage loans has reached 90%. This is a result of the government's fixed-rate allocation policy.

This leads to the effect of mitigating financial shocks due to the decrease in the proportion of variable rates.

Many borrowers chose fixed rates because there was a period when fixed rates were cheaper than variable rates due to government policies.

Therefore, variable rates can be considered more advantageous for borrowers at this point.

A sharp increase in the benchmark interest rate is deemed unlikely, and long-term interest rates are in a structure where they are difficult to fall due to government fiscal issues.

Similar cases have been observed in the United States.

The increase in new loan rates to 7% compared to existing loan rates of 4% places a greater burden on borrowers. This reluctance to refinance leads to a decrease in housing supply in the market, exacerbating the shortage of rental and lease properties and increasing buying pressure.

The money supply (M2) increased by 12% compared to the previous year.

Despite interest rate hikes, market liquidity is expanding faster. This acts as a factor making it difficult to curb housing prices with interest rates alone.

In 2005, there was a case where mortgage interest rates rose sharply while the money supply continuously increased.

Interest rates are not effectively reducing the money supply. If the money supply continues to increase even with rising interest rates, housing prices will go up.

Government fiscal expansion and incentive policies for export companies are the main drivers of increased money supply in the market. Liquidity supply also increased during periods when bank loan regulations were insufficient.

Government fiscal expansion, linked to a long-term strategy for semiconductor industry growth, continuously injects money into the market. Even if one faucet (interest rates) is turned off, if multiple liquidity channels are active, curbing housing prices is not easy.

It is pointed out that with money continuously flowing into the market, it is difficult to curb housing prices with interest rate hikes alone. This highlights the conflict between economic growth policies and real estate market stabilization policies.

These structural changes weaken the influence of interest rates.

As the proportion of fixed-rate mortgage loans increases, the market's fundamental nature has changed, making it difficult to control the real estate market with interest rate hikes alone.

For housing prices to fall, a structure where the money supply growth rate declines and interest rates also rise simultaneously is essential. As long as the money supply growth rate does not decline, a housing price crash is unlikely.

As in past cases, the real estate market can stabilize only if interest rate hikes and money supply reduction occur simultaneously.

To counter US hegemony competition centered on AI, the government is expanding investment in the semiconductor industry. The government plans to release a large amount of fiscal funds next year, making it difficult to slow down the increase in market liquidity.

While the government is attempting to reclaim unearned income, its success is uncertain due to tax resistance. This situation could fuel real estate inflation.

The collapse of the non-apartment market is severe, and the priority should be to normalize the non-apartment market, where short-term supply is possible compared to apartments.

According to a Bank of Korea report, next year's bonuses are projected to be about five times larger than this year's.

With gifts and external funding becoming a reality for young people in their 20s and 30s, it is difficult to prevent this inflow of liquidity.

Since real estate policies take time to be reflected in the market after implementation, analysis suggests that current measures are already too late.

There is a lack of corporate rental structures, and dependence on individual rentals has deepened. It is also pointed out that the government's philosophical approach to unearned income has led to a contraction in non-apartment supply.

This is considered one of the cards the government can play.

Large-scale government-purchased rental housing policies have practical limitations, and concerns exist about public backlash and forced relocation.

The government has introduced liquidity support policies to alleviate cost and financial burdens for construction companies struggling with high interest rates. This is interpreted as a point signaling a partial shift in government policy direction.

Some analyze this as an unavoidable measure for housing supply through reconstruction and redevelopment. It is evaluated as a step back from previous rigid policies.

Especially in metropolitan areas excluding Gangnam, the upward trend is expected to continue.

Increased money supply acts as a key factor driving the real estate market up.