House prices plummet by 70%, and the South Korean economy could potentially regr

Upon waking up in the morning, one finds that their assets have evaporated by hundreds of millions of won! This is what homebuyers in South Korea are currently experiencing!

Due to the continuous decline in South Korean housing prices for 11 consecutive months, some apartments in Seoul have dropped nearly 40% from their peak prices, and some properties have even plummeted by 70%!

What's even more bizarre is that while housing prices in South Korea are falling, mortgage interest rates are still on the rise. Homeowners burdened with these massive mortgages can only painfully part with their beloved homes and sell them at a low price; there is no other alternative!

The collapse of South Korea's real estate market has far exceeded everyone's imagination. Next, Mr. Jiang will provide an in-depth analysis for everyone: the current situation of the plummeting housing prices in South Korea, and whether it will affect our country's real estate market in the future?

First, the true state of the South Korean real estate market.

In the global real estate market, there are two cities that are quite peculiar, one is Hong Kong, China, and the other is Seoul, South Korea.

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Hong Kong has the highest housing prices in the world, while Seoul has become the city where global real estate speculators are the most aggressive, with a level of frenzy that far exceeds that of Wenzhou in the past.

Of course, South Korea has also introduced many measures to curb the rise in housing prices, but without exception, they have all failed. The most expensive area for housing prices in South Korea is Gangnam District in Seoul, where the current average housing price is equivalent to 150,000 RMB per square meter. At its craziest, housing prices in Gangnam District, Seoul, surged by 30% overnight. Just imagine, with a 100 square meter house at a price of 150,000 RMB per square meter, a 30% surge overnight means that by buying a house, you could have made 4.5 million RMB in one night.

Seeing this, you understand why South Koreans are so keen on buying houses!

God wants to make it perish, it must first make it crazy! All illusory speculation will eventually turn into nothingness!On March 16, 2022, the Federal Reserve actually raised interest rates, causing turmoil in the global capital market. Overnight, capital began to withdraw from South Korea. Subsequently, South Korea also raised interest rates, leading to a rapid increase in borrowing costs. Renters' interest payments to banks exceeded the normal rent for renting a house, so they began to refuse to renew their leases on a large scale. As a result, everyone stopped renting, and South Korean landlords became anxious, leading to a massive sell-off, which has resulted in the current housing market stampede effect!

In South Korea, there are many young people who cannot get their deposits back and still have to repay bank loans, emptying the savings of their entire family. In exchange, they have received nothing but an illusion. Consequently, some young people have started to head towards the rooftops.

Some argue that the collapse of South Korea's real estate market is mainly due to the interest rate hikes by the United States, but this is not the case. The root cause is the South Korean government's loss of control over the real estate market.

Behind this is the government's indulgence of capital, allowing ordinary people to speculate on housing and permitting banks to engage in aggressive lending practices, which ultimately led to dispossession and deception.

Secondly, after the collapse of South Korea's housing prices, it is very likely that the country will experience a "lost three decades" even worse than Japan's.

The burst of the full-rent housing bubble in South Korea is the last straw for young people. A South Korean girl named Park Hee-soon committed suicide at home by taking medication. Among her belongings was a complaint about the full-rent housing scam and a 60,000 won water bill notice.

This South Korean girl's complaint has attracted widespread attention across South Korea. The desire for upward mobility among contemporary South Korean youth has completely disappeared, and the South Korean economy has entered a period of recession. According to an announcement by Samsung Electronics, the total operating profit for the first quarter of 2023 was 64.02 billion won, a decrease of 95.8% compared to the same period last year's 1.412 trillion won. At the same time, net profit also fell by 86.1% year-on-year.

This is just the beginning. Some professionals estimate that the collapse of South Korea's real estate market this time could set the South Korean economy back by 20 years! The harm is far greater than the collapse of Japan's real estate market at that time.

Thirdly, we should learn from this.

Firstly, it can be affirmed that we will never experience a situation similar to the collapse of South Korea's real estate market, because our country's real estate market is entirely a policy-driven market. However, even so, we must take this as a warning!Rapid increases or decreases in housing prices can cause incalculable damage to the national economy. It is essential to adhere to the principle of housing for living, not for speculation, and to focus on people's needs. By intensifying the construction of public rental housing, low-rent housing, and affordable housing, we can provide living security for the vast number of young people. At the same time, we must accelerate the pace of industrial upgrading, exert our utmost efforts, and strive for economic growth to improve everyone's income levels. By addressing problems within development and preventing financial risks, we can achieve long-term stability and peace.

The top priority at present is to stabilize employment, promote growth, boost domestic demand, and expedite the transformation of high-end manufacturing. Only when the income of the general public increases can we achieve lasting stability and prosperity.