I heard that real estate will rise after the impeachment process, an opportunity to buy a small apartment?

<Lee Kwang-soo, adjunct professor of real investment analysis at Myongji University>

- Reconstruction and redevelopment policy is likely to be disrupted due to impeachment

- Most real estate laws pending in the National Assembly focus on deregulation..Is there a possibility that easing expectations will decrease after impeachment

- What is the biggest variable in the real estate market in 2025? policy, and interest rates

[News FM Lee Ik-seon Choi Soo-young Issue & People]
□ Broadcast Date: December 18, 2024 (Wednesday)
□ Host: Lee Ik-seon, Choi Soo-young
□ Performers: Lee Kwang-soo, an adjunct professor of real investment analysis at Myongji University

* The text below may differ from the actual broadcast content, so please check the broadcast for more accurate information.

◆ Profit line: Is the issue far? This time is valuable information that makes money just by listening carefully. How to cut taxes, even real estate stock trends. Hit instructors in each field tell us. You're not really doing a real Bokdeokbang today. We invited Lee Kwang-soo, CEO of Gwang-su's Bokdeokbang, to give you savory and deep information. Please come in.

◇Choi Soo-young: Welcome. In the meantime, do you do real investment analysis in Myongji and side jobs as an adjunct professor?

◈Lee Kwang-soo: I have some space. I'm teaching students.

◆Lee Ik-seon: You're getting busier.

◈ Lee Kwang-soo: Oh, yes.

◆ Profit line: So today's topic is the uncertainty of impeachment, hitting the real estate market. While listening to the broadcast, you can also have counseling stories such as worries, questions, and difficulties related to real estate. If you have any opinions or questions about real estate investment, please text me and give me your opinion through the YTN app and YouTube comments.

◇Choi Soo-young: The impeachment is hitting the nation. Not only politics, but also economy and society. In particular, the Korean Yoon Suk Yeol government's real estate policy, which was centered on expanding supply and easing regulations in the real estate market, is likely to lose momentum. It is said that such uncertainty has come. What is the atmosphere in the real estate market recently?

◈ Kwang-soo Lee: First of all, because of this political issue, the uncertainty has grown, as you said. It is particularly affecting the real estate market. There are two reasons for that, and the first is that the unit price of real estate is not large, right? That's why people are a little more sensitive. This uncertainty is bound to be affected in that respect. Second, as you said, the impact of policies is particularly significant in the real estate market in Korea. So various policies have been implemented so far, but we don't know what will happen to them. For example, sellers and buyers are actually anxious about something and there is a lot of uncertainty about whether I am doing well.

◆ Lee Ik-seon: That's why it's shrinking.

◈ Lee Kwang-soo: That's right. So if you look at it in practice, prices will fall overall this year, but they will start to rise in April this year. The price of apartments in Seoul. So it goes up until August and then changes a little from September. So if you look at the actual transaction price alone, it showed a decline in October. In the meantime, as this uncertainty increases, there are some concerns about how much further the market's interest will grow.

◆ Profit line: So this isn't exactly frozen, is it going downward?

◈ Lee Kwang-soo: That's right.

◆Lee Ik-seon: But I heard that apartment sales in Seoul are also decreasing significantly. Including the figure of how much it has decreased. What do you think?

◈ Kwang-soo Lee: So I keep coming out and telling you that when you look at the asset market, price is important, but transaction volume is the most important thing.

◆ Profit line: You've emphasized it many times.

◈Lee Kwang-soo: The number of apartment transactions in Seoul exceeded 9,000 in July this year. It's falling from August. It fell to 6,000 cases, 4,000 cases, and 3,000 cases, and then recovered a little, but it is decreasing faster in December. So today is December 18th, right? But there are 454 apartment transactions registered in Seoul today.

◆ Lee Ik-seon: This month? 453 cases from December 1 to December 18.

◈ Kwang-soo Lee: So if this happens, of course, there is still a reporting period based on past trends, but if this trend continues, it will be reduced to less than 3,000 cases and maybe 1,000 cases will be seen. That's what I think.

◇Choi Soo-young: That's a big drop.

◆ Lee Ik-seon: You're right. It's been half a year. It's already December.

◇Choi Soo-young: I see. In this case, what we compare is that we infer from similar times in the past. Then there was one impeachment eight years ago. during the previous administration of Park Geun Hye What was the real estate market like then? Compared to now? There is a rumor that housing prices fell a little at that time, but it will be a little difficult to compare it to now, but could you still infer the comparison?

◈ Lee Kwang-soo: When you look at that time alone, there was uncertainty, so the volume of transactions decreased and the price slowed down, but after that, the price went up again. It's actually important that it's going to be like this. Yes, conditions are important to make such a judgment, but what has changed in the environment since then? There is one thing that has changed the most. What it means is that the price has gone up too much. So, what's important about asset prices is that speed is more important than absolute, but since prices have almost doubled over the past three or four years, I'm thinking that if uncertainty increases, especially when there's not enough demand to cover prices, the market's trading volume and price decline will be a little bigger.

◆Lee Ik-seon: It's not actually a prepared question, but I remembered it while talking. Let me ask you one question. The population is decreasing. Then, won't housing prices fall more in the future?

◈Lee Kwang-soo: I hear that question a lot. Actually, there's something I always say. We are all dead in the long run. This is what famous Keynes said, "Everyone is dead in organs." I don't worry about the long term.

◆ Lee Ik-seon: Yes.

◈ Lee Kwang-soo: So what I'm saying is that anything can happen in the long term. Actually, it's important for us to respond and plan for example. I think the world will collapse in 10 years, what will happen? Then, you have to do nothing, right? That's why I keep emphasizing it. If you buy your own house, you can do it when the price drops. But if the price drops. Why buy a house when the population is declining in 10 years? That's what they say.

◆ Lee Ik-seon: That's right. That's right. Tell me all about it.

◈ Lee Kwang-soo: So please don't do that. If the price drops, I'll buy my own house.

◆Lee Ik-seon: The counseling story has arrived, so I'll read it for you. Let's compare it to your own experiences. Hello. I'm an office worker for five years. Since I was in college, I've finally made 100 million won. In the past, I thought I could do anything if I achieved 100 million, but I feel disappointed to see it like this. It's not a small amount of money, but I think it's because I can't buy a house. Since I first became an office worker, I recently looked for a small apartment because I wanted to become independent from my parents next year, and it was 380 million won. However, the real estate market is also changing due to the recent impeachment. So I'm wondering if I can buy a house now. I have no choice but to take out a loan, but I'm not sure if I can go that far with my annual salary. I'm anxious because I don't even know if this is the right time to get a loan and buy a house. For your information, my monthly income is 3 million won. The annual irregular income is 1.5 million won. The assets are 122.9 million won, including 73 million won in term deposits, 36 million won in installment savings, 6.8 million won in subscription savings, and 7.1 million won in IRP. We don't have any fans. I want to become independent, but is this right timing for the real estate market to fluctuate because the whole country is in turmoil? Or would it be better to buy it quickly and pay off the loan if the house price is going to rise anyway? What am I supposed to do? I'd like to hear from the wise Gwang-su.

◇Choi Soo-young: You made a very frugal income.

◆Lee Ik-seon: If you don't have a fan, I'm stuck here. There's no fan. I think he's a very hard worker. How did you like it?

◈Lee Kwang-soo: So this person is so great, so good, and I want to compliment him. And even though he's not 30 years old now, he's proud of himself. How you can know that is because you want to show off your assets in detail, so you can brag about it. But the beginning is really important. Because I got a lot of money. It's important how to use this and call out assets, but from there, it's very important to look at the asset market from an investment perspective. For example, until now, it was from the perspective of collecting assets, but now, how are you going to invest this? So, for example, if you look closely, it's only in the deposit, right? For example, I think you thought about real estate while thinking about how to turn your investment around. I should invest in real estate. I don't need a house to buy right away, but actually, if I invest in real estate, will I be able to make a lot of money if the price goes up? Even investing by generating so much debt is paradoxically, the higher the price, the higher the rate of return. That's why you're talking about it from that perspective. First of all, from two perspectives, is this a good time? First of all, no. As I kept saying, there is a high possibility of a decline in prices, so I would like you to invest in real estate or buy your own house when prices fall. You don't buy a house by taking out a loan too much in a situation of high uncertainty like now. The second is about standards, but it's not good to take out a lot of loans. So you have to get it at the right level. It's a concern that it's the right level. That's 80% of your net worth.

◇Choi Soo-young: So if he earns 300 won a month and has about 100 million debt-free assets, how much should he borrow? 80 million won?

◈ Lee Kwang-soo: But if he wants to borrow some money now, he's going to borrow 300 million won. This won't hold up. That's why, for example, if you borrow 300 million won. The interest rate is the average loan interest rate right now, and if you put it at 4%, it's 1 million won each.

◇Choi Soo-young: That's right. It costs about 1 million won a month.

◈ Lee Kwang-soo; And the reason why I saved money like this is because I live with my parents now. That saves a lot of money. But if you go out independently, yes, then you have to pay all the electricity, water, and bills. You have to pay for maintenance.

◆ Profit line: That's right. I'll pay the monthly rent.

◈ Kwang-soo Lee: So if you add up the interest expense, it'll be about 130 to 140 per month. A situation where money keeps going out of buying real estate to invest.

◇Choi Soo-young: Half of your income has to go out.

◈ Lee Kwang-soo: That's right. So, when you look at the size of the debt, the timing, and the state of his assets, real estate investment is not right. Right now. I just want to be clear.

◇Choi Soo-young: So do I have to cringe now?

◈ Lee Kwang-soo: And there's still some time left. During this time, think more about how to invest with that asset.

◆ Lee Ik-seon: It's better to postpone your independence.

◈ Lee Kwang-soo: There is the best way to raise money.

◆Lee Ik-seon: Living on top?

◈Lee Kwang-soo: That's why we're in line, but we're not using it. Then if you live with your parents, you don't use it the most. But you're saying, "Come in quickly" and it bothers me, so I have to go out, and all I have to do is spend money. That's why you should stay on top of it until the end.

◇Choi Soo-young: I hope you were helpful.

◆Lee Ik-seon: He meant to wait a little bit.

◇Choi Soo-young: I hope it helps you make wise decisions. And there are people who are struggling like them, and there are people who are trying to buy a house at this time due to the impeachment of the emergency company crisis, and there are some contracts that have been in progress that have stopped their schedules right now. As a result, there are articles saying that the complexes that are about to be sold and moved in are turned on red. Is there a phenomenon like that?

◈Lee Kwang-soo: Actually, the Dunchon Jugong has been rebuilt since the end of November, and the Olympic Park Foreon is currently moving in with more than 10,000 households. Of course, the size of the resident generation was large, so it was predicted that it would be affected, but this situation is serious, so the atmosphere is a little worse. It is affecting the jeonse price or the house price around it. So, as you said, there seem to be a lot of people who are hesitating to buy it. I think the atmosphere has changed for the sellers as well. We're building up sales right now.

◇Choi Soo-young: If you put it out, the price drops.

◈ Lee Kwang-soo: That's right. So, the number of apartments sold in Seoul is about 88,000, which is about 70,000 cases. It's definitely affected by the continued accumulation of sales.

◆ Profit line: But aren't the people who are selling the market the people who are going to buy from somewhere else?

◈ Kwangsoo Lee: Not really. First of all, you're talking about transferring, but the current sellers have some things in common. What they have in common is long-term holders. It is highly likely that some of their long-term holders have the characteristics of investment demand. So, for example, if you have a reconstruction apartment as an investment, don't you have to sell it over time? Rather than buying anything else. The number of such people is gradually increasing.

◇Choi Soo-young: Shall we read a story?

◆Lee Ik-seon: Dear listener, 'Gwang-su, I'm a temporary two-home owner, so I have to sell an apartment by the end of April next year to avoid heavy acquisition tax. But the situation is like this. Should I sell it at a low price even now? It's Gyeonggi-do Province. ’

◈ Kwang-soo Lee: So you have to look at the situation, but I don't have to look at how others are doing, although it's important for me when I make decisions like this. But I said something important right now. a person who owns a house; others are willing to sell it. Then the sooner you make a decision, the better for me. If I have to sell it anyway. We have to sell it anyway. Then it's better than staying until April, rather than dragging your feet. So this is... When you look at assets, the future is always uncertain. But to reduce this uncertainty, I think the best way to reduce the uncertainty is to make decisions faster than to take my time. So if I don't have to sell it, I'll wait for about 10 years. Then, you don't have to be in such a hurry, but if you have to sell it by April unconditionally, the time may get a little worse as the time goes by now. If you look at the current figures and various situations, I say that.

◆Lee Ik-seon: You are with Issue and People Part 2. Is the issue far? Professor Lee Kwang-soo, an adjunct professor at Myongji University, and Kwang-soo's representative of Bokdeokbang are with us.

◇Choi Soo-young: You emphasized the importance of policies when our CEO said a little while ago. a real estate policy However, if housing-related policies are blocked right now, the planned supply plan will inevitably have an impact. For some, the supply cliff could be worse than the house price movement right now, so supply won't be smooth. Do you agree with those prospects?

◈ Lee Kwang-soo: First of all, the expectation of this supply cliff is the kind of situation that has already come out regardless of this impeachment. Because apartments aren't made all of a sudden, right? Since there is already a plan, a license, construction, sale, and completion are long, such procedures are long, so if you look at such leading indicators, you can expect how much apartments will be supplied in the future as the amount of moving in. But in fact, construction companies have been very difficult over the past two years, so they haven't been able to approve or start construction enough. So, in the future, for example, there is a very high possibility that apartments will move in or that sales will not be sufficient. In such a situation, the government's supply policy could be disrupted by the impeachment. There are these concerns in the market, and I think that's a possibility. One thing is that the government has just tried to revitalize the supply by easing regulations on reconstruction and redevelopment. Such a policy to revitalize reconstruction and redevelopment is likely to be disrupted, so there is a high possibility that it will occur.

◆ Lee Ik-seon: I see. We have a question. Dear listener, 'I'm a breadwinner in my 40s. I live in Namyang-eup, Hwaseong-si, Gyeonggi-do. There is a lot of information on the sale of various apartments, but there is no movement yet. I want to get a new sale, but the plan is delayed. House prices are important whether we should wait for new construction or buy construction, but I think it's currently falling, but I want to know the right timing to buy it. ’ That's what they said.

◈ Kwang-soo Lee: For example, it's a matter of preference, but overall, housing prices are likely to fall, especially in the metropolitan area, so if you look closely at that point, I don't want you to distinguish between new construction and construction. Because new construction is built. The construction is new. It's the same with
Hwaseong-si, so there's a lot of supply. So, from that point of view, don't necessarily divide new construction and construction, but for example, look at the price confirmation and change, and see when it fits the conditions and the budget, as I said earlier. I'll have a chance to tell you again later, but a good opportunity comes. This is because housing prices fall and then there comes a good time to buy a good house. It's good if you make specific plans. So, isn't the future uncertain? I have two emotions. Responding to an uncertain future is unsettling. I'm nervous. What the future holds, but I have to turn this into expectation. I'm looking forward to the future. However, there are important conditions to turn this anxiety into expectations.

◆ Lee Ik-seon: What is it?

◈ Lee Kwang-soo: A detailed plan. There should be a specific plan like where, where, how much, and how much I will buy this apartment and the price of this apartment is hundreds of millions of won. Rather than vaguely approaching new construction and construction, a more detailed plan is needed. Look at my kids. I don't wake up that much in the morning, but there are days when I wake up early.

◈ Lee Kwang-soo: On a picnic day. I have something to do specifically.

◈ Lee Kwang-soo: So I want you to turn that future anxiety into expectations.

◇Choi Soo-young: To meet expectations, the issues of systems and policies mentioned earlier are still important, but real estate laws to expand the supply of the National Assembly are currently pending in the National Assembly. As a result, the Act on Special Cases for Promotion of Reconstruction and Redevelopment, the abolition of excess profits for reconstruction, the abolition of the lease legislation, and the abolition of the roadmap for public disclosure. Overall, this is the revision of the Real Estate Disclosure Act, and these laws actually have a large impact on the real estate market. Can this be passed? Of course, the passage of the National Assembly is made by agreement between the ruling and opposition parties.

◈ Kwang-soo Lee: It's hard for us to predict laws or policies. as there is a political relationship But I want to tell you that these policies have contributed to raising prices overall.

◇Choi Soo-young: You contributed to that.

◈ Lee Kwang-soo: Because it was deregulation. However, housing prices have risen now with the expectations of these policies, and if these policies start to creak little by little, it can naturally affect housing prices. In the meantime, if there has been a certain direction for deregulation, if such bills start to be reviewed due to the stabilization of housing prices or something like this. Then, we believe that expectations for such easing in the market are likely to decrease a little.

◆Lee Ik-seon: In this atmosphere, I wonder if there is any problem with the first new city that just started. The first leading district for reorganization of the first new city, such as Bundang and Ilsan, has already been designated, and I think they are worried that the project of this leading district will be disrupted.

◈ Lee Kwang-soo: This leading district has had problems since its beginning. So there are two problems, and the first one is that for example, it will be implemented like this in 2027 when moving in after 2030. However, since the time is too short, isn't it complicated to move in, such as in a relocation complex or, for example, the members' interests? For example, the reason why it's complicated is that even if you live in the same apartment complex, there are people who bought it for 1 billion won and there are people who bought it for 500 million won, so it was very difficult to coordinate your interests. But I pushed it too much. Until then, do it quickly on a first-come, first-served basis or the rest will be eliminated. So, when selecting this leading district, the resident consent rate is almost over 90%. I've never seen anything like this. The story was so fast that how should I say it? So, as this uncertainty increases again, I'm thinking about taking a break from the issue of selecting the leading district and the first new city.

◇Choi Soo-young: Then let's look at the reconstruction again. I don't think complexes that are already under reconstruction will be comfortable. The situation these days. Apgujeong District 3, which is called the first apartment building of Seoul's reconstruction, is suffering from donations and additional contributions, but this is a problem even though the Seoul Metropolitan Government is carrying out a quick integration plan. So, if this leader shakes, it shakes a little in other places, too. What do you think?

◈ Kwang-soo Lee: So in order to revitalize this reconstruction, a system that increases the floor area ratio and speeds up the business is introduced and promoted through the rapid integration plan and various systems mentioned by the Seoul Metropolitan Government, and there is a very interesting point here. People. If you give me one, I ask for more.

◇Choi Soo-young: Please do this and that.

◈Lee Kwang-soo: So I thought if we just raise the floor area ratio, we'll do everything quickly. But since it raises the floor area ratio, it reduces donations. And I'm going to build fewer rental houses.

◇Choi Soo-young: That's how you earn money.

◈ Lee Kwang-soo: That's right. So it's this point. How do you compromise this or take a direction? This is important.

◆Lee Ik-seon: Don't you have to nail it saying there are no other conditions instead of increasing the floor area ratio from the beginning?

◈ Lee Kwang-soo: That's important, or even if you do, you're asking for it again. So, isn't this what you're saying about them? It's obvious. That is why this is not an easy problem. In other words, it is not easy for the government or local governments to revitalize supply through reconstruction.

◆ Lee Ik-seon: I see. Then, will it be put on the brakes? Last month, the government expressed its willingness to expand housing supply by lifting the green belt in the Gangnam area for the first time in 12 years, centering on the Seocho Surrey Pool district.

◈ Lee Kwang-soo: This means something different. It's different. This is empty land.

◇Choi Soo-young: And it's not reconstruction.

◈ Lee Kwang-soo: That's right. Don't you have a lot of interests? And since this is a restricted development zone, solving it like this will be a good thing, so I will actively participate.

◇Choi Soo-young: Because it's a gift in itself.

◈ Lee Kwang-soo: That's right. And from the government's point of view, you can actually do your business comfortably at will. Because it's kind of a public project, so it looks like it's going to go a little well.

◆ Proficiency line: I don't think this will be braked.

◇Choi Soo-young: Then it seems that the real estate market continues to be sluggish, but the number of apartment auctions nationwide has exceeded 3,400 for two consecutive months. By the way, how about the apartment auction?

◆Lee Ik-seon: I think it's increased a lot.

◇Choi Soo-young: The explosive increase in auctions means that this volume comes out a lot and it's cheap, right?

◈ Lee Kwang-soo: That's right. The number of auctions is increasing, and the successful bid rate or the successful bid price is falling, but the number of auctions is increasing. What this means is that the auction is actually reflected in the economy. So, the economic situation in Korea is bad, so in fact, such auctions are increasing. However, for example, many people use real estate as an expression that they can't hold out and sell it when an auction is held like this, but there is a possibility that it is. Actually, the real estate is... I don't sell it because I said I paid a lot of debt. That's why I can't sell it cheaply.

◆Lee Ik-seon: Then what?

◈ Lee Kwang-soo: Hang in there until the end. Then it comes out as an auction.

◆ Profit line: Hold on and hold on.

◈ Lee Kwang-soo: That's why there are more and more people like that. In that sense, it shows that there is a possibility that the real estate market will get a little worse.

◆Lee Ik-seon: I heard this from somewhere, but I'd like to check it out. I heard that if you buy an auction item, you can get a loan from the bank, right?

◈ Lee Kwang-soo: That's right. It's a relatively large loan. That's why auctions are preferred. The reason is that loans are basically based on the official land price. For example, so let's go with the standard price. But when you do an auction, the standard price is lowered. But the price I bought is low because you give me a loan with this. So I have a relatively high loan ratio.

◆Lee Ik-seon: That's why. Dear listener, 'As far as I know, martial law increases investment in kind, increases prices, and gives transaction volume. This uncertainty arose as house prices went down. If you have time, is this the time to buy a house? ’

◈Lee Kwang-soo: The market is at the beginning of a change, so I hope you can see the change well. Just because real estate fell out like a stock, you should buy it right away. It's hard to change the market right away. So I want you to make a careful judgment.

◇Choi Soo-young: You've explained all along today, and it's the new year in 10 days. Please point out what variables will have the biggest impact on the real estate market next year.

◈ Kwangsoo Lee: First of all, there are two things directly. The first one, I keep telling you, was the policy. How are you going to change? In particular, because of the large impact of policies in the Korean real estate market, I don't know what will happen, but new policies can be introduced when there is a presidential election or political changes like this. The second is interest rates as well. If interest rates fall this fast as expected, there will be a change in the market, but this may not fall. For example, if relatively high interest rates are maintained, it can also have a significant impact on the real estate market.

◆ Proficiency line: I see. Let's stop here. Today's issue is money, I talked about real estate. Lee Kwang-soo, CEO of Gwang-soo's Bokdeokbang. He is an adjunct professor of real investment analysis at Myongji University. Thank you for your precious time today. Thank you.