■ Broadcast: YTN Radio FM 94.5 (09:00-10:00)
■ Host: Reporter Cho Tae-hyun
■ Air date: December 23, 2024 (Monday)
■ Dialogue: Kim In-man, director of the Real Estate Economy Research Institute, Kim In-man
* The text below may differ from the actual broadcast content, so please check the broadcast for more accurate information.
◆ Reporter Cho Tae-hyun (hereinafter referred to as Cho Tae-hyun): Hot issue hot place in a hot area. How about that? It's time. Unfortunately, there is a situation that is not that hot recently. Real Estate Issue Let's analyze in detail with Kim In-man, director of the Real Estate Economy Research Institute. It's connected. Is the warden here?
◇ Kim In-man, Director of Real Estate Economics Research Institute (hereinafter referred to as Kim In-man): Yes, hello.
◆ Cho Tae-hyun: Yes, how are you? Before we get into the full-fledged story, director. Let's take a look at this news. When we think of rich neighborhoods, there are places like Gangnam and Seocho that come to mind. However, last year, Yongsan was said to have the highest income-based autonomous district. Should it be considered as a trend in which generational changes in rich villages occur?
◇ Kim In-man: I don't think it's just a generational change. Yongsan is rich and Gangnam is rich, but there is a difference. In the case of Gangnam, there are many standardized high-priced apartments, so many professional and large corporation executives live there. In the case of Yongsan, there are many presidents and companies such as Hannam The Hill and Nine-In-One Hannam, so it seems that Yongsan is a place where many students are ranked in the country. But you can think of Gangnam as the top 10 places in the class. It's all good places, so I think you can look at the competition that you like better.
◆ Cho Tae-hyun: Yes, so I said this like an appetizer before I did it for fun. It's hard for me to even look at it, so I'll move on. It is said that competition among large construction companies for reconstruction and redevelopment orders in Yongsan and Gangnam is in full swing, so can this be considered to be linked to political uncertainty such as the impeachment?
◇ Kim In-man: The impeachment process is also connected. Overall, the construction industry is not good right now. PF insolvency problems are still continuing. In general, the construction industry is in a very difficult situation due to high interest rates. Nevertheless, in times of such difficulty, places where business is clear, places with good business, and places where brand value can be raised. If you raise a brand apartment, many people will pass by, and in the case of luxury apartments, you can advertise even if you don't advertise on TV. Each other is making every effort to select our brand. Hannam New Town in Yongsan's Hannam District 3 will become a rich village in the future, and Hannam District 3 was captured by Hyundai Engineering & Construction. Hannam District 4 is a double carriage in the Korean construction industry. Samsung C&T and Hyundai Engineering & Construction are now fighting for their lives, and Hyundai Engineering & Construction is competing with money to guarantee profits of 190 million won per union household. Samsung C&T is competing with infrastructure to attract famous academies and hospitals in Daechi-dong, Gangnam.
◆ Cho Tae-hyun: If a construction company says it's childish, will it be childish?
◇ Kim In-man: Well, I'll try hard.
◆ Cho Tae-hyun: I'm sure he'll work hard. I'll look forward to it. But as you said, it's still hot in such a popular place. I think the overall situation is very difficult. Small and medium-sized construction industries in the provinces are closing down one after another. This situation continues to be reported. There are also concerns that there may be problems with the ecosystem of the domestic construction industry itself. What do you think, warden?
◇ Kim In-man: Overall, it's a very difficult situation right now. As we focus only on Seoul and only on the consumer's perspective, we are seeing that housing prices have risen a lot in the summer this year, but local construction companies are complaining of very difficulties. Recently, there are 394 construction companies that close their doors, and overall, there are a lot of local governments. As of November, there were about 65,000 unsold homes. Of these, 80% are fat. And even if we call it a malicious unsold house, it is not sold and the number of unsold houses after completion continues to increase, but it is still very difficult because about 14,000 households nationwide, and about 80% of the provinces account for it. This means that there are many empty houses, and for construction companies, there is a situation where construction is done according to the construction and money cannot be collected.
◆ Cho Tae-hyun: It's a bad stock.
◇ Kim In-man: It's in bad stock. Malicious inventory is a problem that cannot be solved easily. So this year was probably hard as well. Next year in 2025 is expected to have a harsh winter as financial costs continue to be overdue.
◆ Cho Tae-hyun: Okay. The local market is getting worse during the harsh winter. Let's expand the story a little more to the overall real estate market. I told you before the exchange rate, but it's over 1450 won now.It stays in the late 1440 won range. There is an analysis that this exchange rate is also a bad factor in the real estate market, so in what sense?
◇ Kim In-man: Well, the exchange rate is also not good for the real estate market. Those who have recently sent their children to study abroad are getting very worried. Basically, interest rates and exchange rates are a bit intertwined. Real estate is also one of the pillars of the economy. When interest rates fall, house prices rise. We've been talking about this a lot, but recently, economic uncertainty has increased. Simply, if the exchange rate rises a lot, companies' import prices will rise, and if prices rise, the Bank of Korea will not be able to lower the benchmark interest rate, but the more worrisome is the Trump uncertainty in the U.S. If Trump becomes Trump, he also imposes stronger tariffs. It also reduces taxes in the U.S. If this happens, prices in the U.S. will eventually rise, and the Bank of Korea and Korea have only recently started to fall a little when prices rise, but if this doesn't go down faster or can't go down, we're only expecting a cut in the base rate. In the market, if the opposite situation occurs, it will be very psychological. Recently, there have been a lot of domestic political uncertainties and various difficulties, and if the economic problems are shaken, our real estate market may also be considered a bad news.
◆ Cho Tae-hyun: Okay. As you said, apartment prices across the country continued to decline for five weeks last week as political uncertainty is now a problem. This is the beginning of a downtrend. I think there's a prospect like this, but how do you evaluate it?
◇ Kim In-man: It's not the beginning of a downtrend. As far as I can see, it is already in the section of the adjustment field. From 2017 to 2015 to 2021, we were on the rise. It is a coordination site that has been fluctuating since 2022, but it has fallen a lot recently. This summer, the weekly price change rate of Seoul apartments rose to 0.32% but recently fell to 0.01%, so I think most of the increase this summer was returned. There are a number of difficulties, but political uncertainties continue to accumulate now, and investor sentiment is rapidly shrinking due to concerns about a recession, fatigue over a short-term surge, and loan regulations. I think the biggest problem is political uncertainty. It's full of fog right now. What should we do if it's foggy even when we're driving? As if you have to stop for a while, everything is all-stop now. Those who want to buy a house don't care at all, and let's just order it for now. That's how I feel until the uncertainty is removed, and the landlords don't know what to do, so you can just think of it as frozen.
◆ Cho Tae-hyun: It's going to be a very big variable in this part of where the regime is going to go.
◇ Kim In-man: That's right. It's also because we don't know how the policy will come out.
◆ Cho Tae-hyun: It's because it's so influenced by policies, but even in this situation, some analysts say that they will at least go strong after the middle of next year. How do you evaluate the analysis director who comes out like this?
◇ Kim In-man: There's another thing to believe. If the landlords drop the price a lot, even if it's a sudden sale, the transaction volume has recently fallen, but the price has not actually fallen much. So if you think about it again as a belief, we also had an impeachment phase in 2016, from 2016 to spring 2017. At that time, the trading volume fell sharply for about four months, but the price did not drop significantly. The general theory is that we can wait and see for about four months because the uncertainty has stopped at about four months and has been resolved. Then, if uncertainty persists for more than six months, it may turn into a terrorist attack and house prices may fall, but since it was about four months ago, I think it will be like this again. In addition, the volume of occupancy in Seoul in 2026 and 2027 will decrease significantly. Then, jeonse prices are likely to rise and base interest rates are likely to fall, so considering this, many people cautiously expect a rebound in the second half of the year.
◆ Cho Tae-hyun: I think we need to point out the problem of supply shortage. As political uncertainty has grown like this, the government's policy on real estate supply itself has become a complete all-stop. Then, what do you think about the impact of this on the real estate market?
◇ Kim In-man: Supply is very important. It's very important. It is difficult for the government's policy to lead to supply immediately next year or in the future next year. Basically, the construction period is three years.
◆ Cho Tae-hyun: Because apartments are not bread.
◇ Kim In-man: That's right. Also, in the case of green belts, it takes more than 10 years, so first of all, we need some time, and we can't deny that we don't have enough supplies to move in 2026 and 2027. What worries me a lot is whether the various policies pursued by the Yoon Suk Yeol government will be carried out consistently. There are three new cities, such as the 1st new city and the Green Belt, and the 3rd new city, and I think it will be carried out consistently. Because the lack of supply is a problem that has nothing to do with politics. Even during the Moon Jae In government, the third new city was promoted to increase supply. The Yoon Suk Yeol government also inherited Baton, the third new city, and proceeded as it was. Reconstruction of the first new city has recently become an issue, so can't you do it? If I don't do it, I don't think I'll gain from not being a politician or president. There is a lack of supply, but the supply needs to be increased. There are about 1 million people in 300,000 households in the first new city, and I don't think there's any reason why I shouldn't supply these 1 million votes while eating away at the tickets. So I'm very worried right now and there are a lot of concerns, but I said that the supply is going on steadily, and if I go to the meeting and ask, there is no problem with the supply plan, and even if the government changes, the people working for the Ministry of Land, Infrastructure and Transport are the same. Well, I think you can know that the supply policy is consistent because the same people work, whether it is the previous government, the current government, or the next government.
◆ Cho Tae-hyun: I'm going to go. But what do you think of the possibility of this being delayed or delayed more than planned?
◇ Kim In-man: I don't think so. Because the person who worked said I was the same Ministry of Land, Infrastructure and Transport. If I take only the first new city as an example, if the regime changes, would there be a reason to delay it if I became president? There is a lack of supply anyway, but if I am in charge of the first new city, I think I will find a way to do it faster. The leading district will also be additionally designated. In order to come up with strong migration measures and speed up, I don't see any reason for the public to intervene and find ways to speed up the speed led by the public. The supply will be insufficient anyway, and if I become the head of state administration, the lack of supply will be my responsibility. So I think I'll work harder.
◆ Cho Tae-hyun: You mentioned a bright outlook for supply. Let's wait and see what happens. Let's take a look at the subscription market. The subscription market also seems to be in the spotlight, but after the impeachment, it seems to be frozen. There are also reports that the contract rate is actually falling because there are many people who leave even after temporary contracts. What do you think there are alternatives that can dampen or ease buying sentiment now?
◇ Kim In-man: The subscription market is shrinking a little, but I don't think it's desirable to come up with stimulus measures right away just because it's shrunk a little. I think we need to leave it to the market for now. If the investment sentiment is completely frozen, that's not the case. Overall, the uncertainty has grown, so I'm watching, but even when martial law has recently occurred and we're impeaching, apartments with an upper limit on the sale price called Akroritz County from Bangbae-dong, Gangnam, have a competition ratio of more than 800 to 1. So there are still a lot of people flocking to places that are price competitive and moneyable. If it's not certain, we're waiting and seeing because there's a sentiment to wait and see, but the market itself is not dead, so if the measures come out right away, it could give the wrong signal, so it would be better to wait for a while until the uncertainty is removed calmly. What the political authorities should also do is that it would be better to proceed quickly so that the uncertainty can be removed quickly so that the Korean people do not feel anxious.
◆ Cho Tae-hyun: Okay. I think resolving uncertainty is always the most important task. In order for this frozen real estate market to be revitalized, there may be problems such as resolving political uncertainty, as you said, but I think we need some other opportunities. What do you think will happen?
◇ Kim In-man: First of all, the anxiety needs to be put to rest, but I think we need some signal. Maybe the year needs to change a little, and there are only a few days left, but by the new year of 2025, we usually find hope. I think we need to come up with some roadmaps. It would be nice to have a roadmap for the political schedule that will proceed like this in the future, and if government officials pour out policies for no reason, it may become more unstable, so I think it would be nice to focus on the exhaustion of unsold apartments in the provinces. Prior to us, we said that the construction industry is very difficult, but the number of unsold apartments in the provinces has been increasing for three years, so if you buy an unsold apartment in the provinces for a year, you will be exempted from transfer tax for five years, I don't think the Seoul metropolitan area needs to give it to the provinces. If you give it to the provinces like this, the demand for investment to Seoul will turn to the provinces, which will help balanced development and help construction companies, so it would be better to do what you have to do calmly.
◆ Cho Tae-hyun: We need to focus our policy capabilities on the unsold side of the provinces. Then, this time, we will focus on these individual end users rather than individual investors. As you said, there are less than 10 days left this year. You'll soon be moving on to next year, but if there's a real estate flow next year that you must watch, what would you advise?
◇ Kim In-man: According to our recent psychology, landlords tend to buy when house prices go up and when they raise prices. I have to buy some when there is some adjustment, but there are many cases where people who don't get profits from stocks and real estate are anxious and don't get the right timing to sell. The reason real estate makes more money than stocks is that it can be held for a long time. It's more important when we sell a house than when we buy it, but we keep it for an average of seven years. Then, don't worry too much about short-term situations, and if it's adjusted to uncertainty in the first half of next year, it's a good opportunity to buy my own house, so if you need it and have funds, you'd better look for auctions or urgent sales. However, you should never get an unreasonable loan, and since the loan interest rate may rise, you should manage the risk that can last for about three years.
◆ Cho Tae-hyun: I think all assets are similar. I think what you said is used even if you replace other assets. You can also hold stocks for a long time, so you can make long-term investments. If you do this, you won't lose money. So far, I have diagnosed various issues surrounding the real estate market with Kim In-man, director of the Real Estate Economic Research Institute. Thank you for talking today.
◇ Kim In-man: Thank you.
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