[Initial Insight] Will House Prices Rise or Fall After the New Government Takes Office?

In a currently airing dating program, the male and female participants use pseudonyms on the first day and appear without any prior information, sparking curiosity. It is only on the second day that they introduce themselves, revealing their occupations and places of residence. At this point, most of the men invariably mention one thing: that they own an apartment, in other words, a ‘house’ registered under their name.

This underscores how essential owning a home is considered in Korean society as a core element in the marriage preparation process. To the extent that there are even sayings about giving up on marriage due to the lack of a house. This is also reflected in research findings. According to a report titled “The Impact of Housing Types on Marriage and Childbirth” published by the Korea Economic Research Institute in 2020, living in a monthly rental reduces the likelihood of marriage by 65% compared to owning a home. Additionally, the probability of childless households having their first child decreases by 56%.

Moreover, in our society, a house is also the most important means of asset accumulation. This holds true even for the MZ generation (those born between 1980 and 2010). In a financial investment survey conducted last year by the Federation of Korean Industries targeting the MZ generation, 4 out of 10 respondents cited real estate as the most necessary investment tool for asset growth. Various loan regulations imposed by the current government under the pretext of curbing speculation, along with soaring housing prices despite these measures, have drawn complaints from both non-homeowners and homeowners. Punitive tax measures, which were one of the means to increase supply, also sparked dissatisfaction among homeowners. The current government’s real estate policies, which failed to strike a balance, were marked by reflection and apologies during its final year in office, ultimately making real estate a decisive factor in the presidential election outcome. This is why there is heightened interest in real estate policies ahead of the new government’s inauguration.

So, what is the most anticipated real estate pledge of the new government? According to a survey by the real estate brokerage platform Zigbang, the top choice was “raising and reforming the LTV (Loan-to-Value ratio) for first-time homebuyers.” This indicates a significant burden from loan regulations. The second most favored was “restoring the 2022 official property prices to 2020 levels,” followed by “postponement of the capital gains tax surcharge on multiple homeowners” and “supplying over 2.5 million households (10.7%) over five years.” When asked about the most necessary real estate policy of the new government, “improving the loan system” received the highest response, followed by “improving real estate taxation” and “expanding housing supply.” Overall, easing regulations and increasing supply are seen as the most desired and necessary real estate measures.

Recently, the regulatory easing that seemed likely to be implemented immediately after the new government’s inauguration appears to have been pushed down the priority list. This is due to signs of housing prices stirring again amid rising expectations after the presidential election. On the other hand, positive signs of emerging from the prolonged transaction freeze tunnel are also being observed. Some voices express dissatisfaction with the Presidential Transition Committee, which is showing a sensitive and indecisive attitude. There are even concerns that regulatory easing might once again fizzle out. Will housing prices rise or fall after the new government takes office? However, it is too late to be swayed by each individual development. The period of suppression caused by regulations has been too long. Didn’t the various regulatory measures introduced early in the current administration to curb housing prices ironically result in a housing price surge?

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