"Foreign Media Reports on 'Korean Housing Price Surge and Luxury Obsession Amid Loss of Hope' ? What Are Your Thoughts?"

"Foreign media hit the mark," "No, I'm stretching my finances to buy a house," and other diverse opinions
Expert: "If buying a house becomes difficult, people pursue current satisfaction... a factor of self-rationalization"

A long queue is lined up in front of a Chanel store in Korea. [Image source=Yonhap News]

[Asia Economy Reporter Kim Soyoung] Recently, a foreign media report has brought renewed attention to the Korean phenomenon of 'open run,' where people line up early in front of department stores to purchase luxury goods. The media cited 'the sense of loss from being unable to buy a house due to skyrocketing housing prices in Korea' as one of the reasons for the obsession with luxury brands.

On the 15th (local time), Bloomberg News in the United States pointed to revenge consumption related to COVID-19 and the soaring housing prices since President Moon Jae-in's administration as reasons why Korean consumers are enthusiastic about luxury goods. Bloomberg introduced the phenomenon by saying, "Since last year, in Korea, people have been lining up early in front of department stores to buy $9,500 (about 11 million KRW) handbags as soon as the stores open," and included photos of people lining up on the street and tents set up in front of stores.

It continued, "The luxury consumption boom occurred as overseas shopping was restricted due to the spread of COVID-19, leaving some extra money," and analyzed, "Chanel Korea raised prices on certain items four times this year, but this only increased demand."

In April, Hong Kong's South China Morning Post (SCMP) published an article titled "The real reason Chanel and Louis Vuitton are raising prices," analyzing that "these brands view price increases as a means to control brand image and guarantee a perception of luxury."

Office worker Kim (33), who said he has experienced 'open run,' said, "I spent my vacation at home for two years. Considering I couldn't travel during that time, the money is the same and not regrettable." College student Park (24) also said, "I'm still a student and originally didn't think much about luxury goods, but since prices keep rising, I started to worry I might not be able to buy them later, so I became interested," expressing concern that "prices will rise a lot again next year."

The report also analyzed, "The sense of loss among people in their 20s and 30s who can never buy a house due to the rapid rise in housing prices in Korea is also a factor in the obsession with luxury goods." It added, "According to KB Financial Group, the average price of apartments in Seoul, which was 607 million KRW in June 2017 when President Moon took office, more than doubled to 1.24 billion KRW as of November. For the 20s and 30s generation earning about 3 million KRW per month, this is a huge burden."

When the foreign media specifically mentioned the scale of Korea's housing price increase, various reactions poured in from netizens. Comments included, "Wow, even photos of people lining up like that, open run is embarrassing," "Foreign media also know about Korean housing prices," and "What's wrong with buying luxury goods with your own money?"

On the morning of May 30th, citizens are waiting to enter in front of the Shinsegae Department Store Luxury Hall in Jung-gu. [Image source=Yonhap News]

One netizen said, "At first, I felt a bit uncomfortable with the term 'luxury obsession,' but honestly, that's our reality now. The foreign media hit the nail on the head," adding, "I knew it, but reading that article made me see it from a third-party perspective. It made me think a lot."

Another netizen said, "There is some degree of revenge psychology, but I think linking it to housing prices is a bit much. It seems they don't know about the 20s and 30s generation's full financial leverage yet."

Statistics also confirm the increasing trend of domestic luxury consumption. According to market research firm Euromonitor International, Korea's luxury consumption scale is $14.2 billion (about 16.8 trillion KRW), a 4.6% increase from the previous year. This ranks as the seventh largest market globally, following the United States, Canada, Japan, France, the United Kingdom, and Italy.

According to Bloomberg's tally, although there are only nine Chanel stores operating domestically, Chanel Korea achieved 8.5% of the brand's total sales last year.

Experts see consumers' desire to show off reflected in the luxury run phenomenon. Professor Lee Eun-hee of Inha University's Department of Consumer Studies said of this luxury consumption behavior, "Consumers relieve stress by spending on luxury goods as a substitute cost for overseas travel," and added, "They enjoy the display effect not only offline but also online through social networking services (SNS) by purchasing luxury goods, which are representative products of conspicuous consumption."

Professor Lee diagnosed, "Furthermore, through 'luxury run,' consumers can flaunt that 'I bought something difficult to get,' which seems to be why they continue."

Regarding revenge consumption due to rising housing prices, she said, "As it becomes harder to buy a house, people give up and seek satisfaction in the present," but also noted, "This can be seen as a self-rationalization factor, judging that saving money is meaningless because buying a house is difficult."

This content was produced with the assistance of AI translation services.