The 'Question Mark Market' Where Selling or Buying a House Feels Scary

by Kim Minyoung

Published 20 Apr.2022 11:14(KST)

Updated 20 Apr.2022 13:47(KST)

[Image source=Yonhap News]

They say regulations will be eased... but interest rates keep rising

Too many variables make market predictions difficult

Even the 2030 Yeongkkeul group is watching the market cautiously

[Asia Economy Reporter Kim Min-young] "Negative and positive factors are playing a seesaw game," "I'm scared to buy and scared to sell."

The real estate market, caught between the presidential election and the new government's inauguration, is going through a chaotic period without a clear direction. In some areas, housing prices are creeping up slowly, while others are experiencing a severe transaction freeze. Various negative and positive factors coexist in the market, and participants are only watching cautiously, unable to predict which variables will have a greater impact.

Park Won-gap, Senior Real Estate Specialist at KB Kookmin Bank, said on the 20th about the recent market atmosphere, "If easing regulations on reconstruction and redevelopment and the new government's message of tax policy relaxation are positive factors, additional interest rate hikes could act as negative factors," adding, "In short, it is a market like a 'gyeruk' (chicken ribs)."

What moves the real estate market is psychology, but the variables affecting this psychology?that is, uncertainty?are too great. When the new government takes office in May, major changes in real estate-related taxation, finance, and supply policies are expected, but the extent and specific details have not yet been revealed. However, temporary measures excluding heavy taxation on multi-homeowners to resolve the prolonged transaction freeze and messages about easing reconstruction and redevelopment regulations are considered factors that could drive housing prices up again.

On the other hand, the day before, Lee Chang-yong, nominee for Governor of the Bank of Korea, hinted at additional interest rate hikes with a call for a pace adjustment during his confirmation hearing, adding a negative factor that dampens housing purchase enthusiasm and increasing confusion.

The slowdown in buying by the 2030 generation 'Yeongkkeul' group, who led the real estate market last year, also reflects this market atmosphere well. It is interpreted as a complex effect of perceptions of housing price peaks, strengthened loan regulations, the trend of interest rate hikes, and policy uncertainty.

Meanwhile, on the 19th, the Seoul Metropolitan Government submitted a tax reform proposal to the Presidential Transition Committee, aiming to lower the cap on property holding taxes, adding another variable depending on whether the committee accepts it.