Shinhan Financial: "Stabilizing Housing Prices Will Boost Consumption, Marriage, and Childbirth"

Research Institute Publishes Report: "What Will Change If Housing Prices Stabilize"

There is an analysis from the private financial sector that stabilizing housing prices could ease the asset inequality structure centered on real estate, and furthermore, have a positive impact on social issues such as consumption, marriage, and childbirth. It is also pointed out that the financial market could undergo structural changes, such as an increase in demand for diverse financial products.

On March 8, the Shinhan Financial Group Future Strategy Research Institute released a report titled "What Will Change If Housing Prices Stabilize: Qualitative Transition of Domestic Demand and the Role of Finance." The report diagnoses that alleviating the housing cost burden through real estate price stability could influence household consumption, marriage, and childbirth, and ultimately lead to economic and social transformation in Korea.

According to the report, asset inequality in Korea is at its highest level on record. The net asset Gini coefficient reached 0.625 last year, the highest since statistics have been compiled. In contrast, the income gap has been narrowing, indicating that Korea's inequality structure is shifting from focusing on 'income' to 'assets.'

The key factor driving the asset gap is real estate. About 70% of household assets are concentrated in real estate, with the top 20% in terms of net assets accounting for 65% of total assets. Meanwhile, the bottom 40% holds only 4.8%. The research institute pointed out, "The rise in real estate prices has widened the asset gap between classes to a level exceeding several years' worth of income differences." The report notes that the deepening inequality caused by real estate not only directly worsens quality of life through housing instability and reduced consumption, but also reinforces intergenerational and intragenerational inequality, thereby solidifying class divisions and leading to broader social issues.

It is predicted that if the housing cost burden decreases, the effect of consumption recovery will be particularly significant among the younger and middle-aged generations. The report also suggests that increased investment in human capital, such as education and self-development, could bring changes to economic activity. It further analyzes that this could affect marriage and childbirth. The research institute explained, "In Korea, the perception that marriage is closely tied to securing a home is very strong. Therefore, as the housing burden is reduced, the economic barrier to deciding to marry will be lowered, creating an environment that reduces the barriers to actually marrying and having children."

The report also anticipates that stabilizing housing prices will bring structural changes to the financial market. As the burden of buying a home eases, young people and newlyweds may have more discretionary funds, leading to increased demand for entry-level financial products such as installment savings designed to build seed money, youth ISAs, and installment-type funds. The report also forecasts that the elderly will see growing financial needs related to downsizing, home pension plans, and inheritance or gifting, in order to liquidate real estate assets. In the housing finance sector, demand may expand for new financial products such as monthly rent loans and deposit return guarantees.

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