Today’s Money Class focuses on information that can immediately benefit those who are not well-versed in economics. Let’s look at today’s keyword: “There are no new homes.” A surge in housing prices is expected by 2025. The government has announced real estate measures to increase housing supply just before the Chuseok holiday. This is due to predictions that housing supply will decrease in 2-3 years, potentially leading to skyrocketing home prices. With already high home prices, many are curious if the shortage will cause them to rise even further. We will check the current real estate market situation with an expert and evaluate whether the measures announced are effective. We have Kim In-man, the head of a real estate research institute, with us to fully understand the real estate market. Hello! The government predicts that the supply of apartments will significantly drop in 2-3 years. Is there any basis for this? Recently, there have been increasing voices about this concern, as there will be a shortage of housing in the future.

There are growing voices of anxiety about the necessity to buy, as prices are expected to rise. There are reasons behind this concern. The reason for this controversy is that we need to look at the state of housing permits and construction volumes. A housing permit is required before building a house, while construction refers to the actual start of the building process. Let's take a look at these aspects. 

If you look at the construction volume, it connects to the occupancy volume three to five years later. According to the graph, 347,000 households received permits by 2022, but in 2023, that number plummeted to 213,000 households. This suggests that the number of units available for occupancy could significantly decrease in three to five years. The same goes for construction volumes; construction starts and takes two to three years to complete, which determines the occupancy volume two to three years later.

If you look at the graph, in 2021, the amount was 348,000 won. Last year, it decreased, and this year, it has dropped sharply to 114,000 won. This means that in 2 to 3 years, specifically from 2025 to 2027, the amount of housing supply will significantly decrease. If the supply decreases, ultimately, won't housing prices rise? As our market's consumers become more aware of the concepts of supply and demand, concerns about the housing supply are growing. There is a basis for this; construction companies receive permits and begin construction based on a set amount they plan to build. However, looking at the current figures, it seems that in a few years, the construction of apartments will significantly decrease, and the government is making predictions based on solid evidence that the future looks uncertain. But why is there such a decrease now? There are reasons for this; construction companies are not simply halting construction without cause. There are several reasons behind it.

If we take a look, we can see that unsold properties have significantly increased recently. So, it's not like a few years ago when simply building would guarantee success. First of all, the prices of raw materials have risen considerably. As a result, labor costs and material costs have increased significantly, making it very difficult to generate profits from cement. 

Secondly, there's the issue of funding. Financing has become challenging due to rising interest rates, which has also put pressure on financial institutions. There is project financing, known as PF loans, but the interest rates for these loans have also increased, and loans are not being granted easily. Even projects that have received loans are not getting extensions, leading to a struggle for funding. 

The combination of loan rejections and high interest rates has caused construction companies to feel overwhelmed. They are realizing that they cannot continue under these conditions without incurring losses, so they are reducing the volume of their projects.

To put it bluntly, apartment construction companies are struggling to do business, so they are building less. However, I find it hard to understand because there are still many places where apartments are being built as I walk down the street. I often wonder if there will be enough people to fill all those apartments once they are completed. I question whether the predictions that apartments will become scarce later on are correct. People point out that there are so many houses, yet they still ask why they don't have a house of their own. If we look at our housing supply rate, the statistics from 2021 show that it is at 102.2%. This means that the number of houses exceeds the number of households, as it surpasses 100%. Since the housing supply exceeds the demand, we are no longer a country facing a housing shortage. However, it’s puzzling to think about why there aren’t any houses available for me. At this point, we need to investigate what is going on.

We need to look into homeownership rates. We should find out how many people own homes. According to statistics from 2021, the homeownership rate appears low. Before we examine homeownership, it’s important to note that the housing supply rate is 102%. This includes not just apartments, but also villas, rural homes, and vacant houses. While we tend to think of the 102% as referring to apartments, it actually includes vacant houses and homes that people are unable to live in, like basements. Therefore, when considering all types of housing, there is a significant shortage of homes that people actually want to live in. 

Next, we should also analyze the homeownership rate. The national homeownership rate is only 60.6%, meaning that out of 100 people, 60 own homes, while 40 do not. If we look at Seoul, the situation is even more striking, with a homeownership rate of only 47.9%. This means that more than half of the people in Seoul do not own homes, indicating that many people are multi-homeowners and possess a large number of properties.

Because we have a lot of belongings, I wonder why I don't have a house. This refers to the fact that other multiple homeowners have many properties. In Seoul, there is a lack of land, and due to reconstruction and redevelopment, as well as the overall difficulty in housing supply, it is highly likely that the housing supply shortage in Seoul will continue for the time being. The statistic showing a housing supply rate of over 100% can be seen as an optical illusion. Particularly, there is a shortage of new apartments. As I mentioned regarding Seoul, we want new apartments with a usable area of at least 59 square meters, but there is an absolute shortage of new apartments. Therefore, the supply shortage will likely continue for the foreseeable future. Another thing I am curious about is that our country has a low birth rate, which means that the population will decrease in the long term. Consequently, the demand for houses will decline, and those who no longer need to buy houses will affect housing prices.

Isn't it going to drop? Theoretically, that's how it works. If we think about it simply, how can house prices go up when the population is decreasing? That's true, but the issue isn't immediate; it could become a problem in 20 to 30 years. The logical reasoning I just mentioned is because we have what we call the home-buying age. You can't buy a house right after you're born. Unless you're born with a silver spoon, the structure makes it difficult to buy a house. Typically, the home-buying age is considered to be between 40 and 69 years old. Recently, many people in their 30s are buying homes as well, but the significant decline in birth rates means that in 20 to 30 years, when those fewer newborns grow up and reach the home-buying age, the demand will decrease. So, it doesn't have a major impact right now. In fact, psychological factors have a greater influence. People feel anxious and think, I need to buy a house now.

Because of this, we cannot judge everything solely based on the population numbers. The impact of the declining birth rate on population decrease and its effect on housing prices is a matter that should be viewed more long-term. Psychologically, there are still people who feel they need to buy property. In the case of Seoul and the metropolitan area, there are individuals coming from rural areas seeking good universities and job opportunities. As a result, smaller cities in the provinces may be more significantly affected by population decline.

Now, returning to the initial keyword, let me ask an important question: Is the prediction that housing prices could skyrocket in two to three years a valid one? It cannot be said to be wrong; there are grounds for it. If the amount of construction starts and permits decreases, the supply of move-in-ready homes may also decline. However, we must understand that the supply of move-in-ready homes does not solely determine housing prices. Let me show you an important point regarding this.

You will get a sense of it. Let's take a look at the supply of apartments in Seoul and examine the transaction price index. There were many houses in 2018, 2019, and 2020. In particular, in 2019, the supply peaked at 47,500 units. Generally, when the supply is high, house prices should fall. However, looking at the price index, it actually rose the most during that time. Now, in 2022 and 2023, we see a decrease. The supply of apartments in Seoul is declining, and house prices are also falling. Conversely, when the supply decreases, house prices should rise. Therefore, not everything aligns perfectly. While it can be a contributing factor, it cannot be an absolute criterion. In fact, psychology plays a much larger role. Even if the supply is low, if interest rates rise like last year and create an atmosphere of don't buy a house, demand can decrease significantly. Additionally, anxious homeowners may flood the market with listings, leading to an increase in supply.

Since there is also a compounding effect, I think we shouldn't make decisions based on just one rental supply. The logic of supply and demand determining prices doesn't seem to fit in the real estate market. It's just one factor, yet we are worried about three years from now based on that single factor. Depending on the flow of the real estate market and our psychology, housing prices could rise or even fall in three years. Therefore, the government has introduced measures to prevent a surge in housing prices. The government announced this on the 26th of last month, but due to many big news stories, the real estate measures got overshadowed. Since people are not well-informed about it, let me clarify what it's about. I find it quite unfortunate that while they are saying they will ease regulations on private housing supply, they are also talking about easing regulations. Let's take a look at that. They will ease regulations and ensure smooth funding; earlier, we talked about PF loans and the one-year restriction on resale for public land.

This is not about the restrictions on selling pre-sale rights; rather, it concerns the sale of land held by construction companies. It expands opportunities for those without housing, changes the funding sources, expands guarantees for PF loans, and aims to accelerate redevelopment projects. It also intends to ease regulations on single-person housing to increase supply. Unfortunately, this has been somewhat overshadowed by political issues. This is a measure aimed at suppliers. Looking at this content, what do you think? It seems beneficial for construction companies, but many might wonder how it relates to us. While it could help increase the volume of available properties in three to five years, it does little to calm the current anxious sentiments. Our market's consumers want specific and intuitive information, such as where new cities are being developed and when they should apply for pre-sales. Given that this is a supplier-oriented measure, it is somewhat difficult to empathize with.

There are some disappointing aspects from a psychological perspective. Lastly, if I could briefly address the timing for those looking to buy or sell a house, I believe that over-calculating can lead to confusion. As I always say, it's essential to assess whether it is truly necessary and to establish a small plan carefully. Recently, the likelihood of moving towards lower interest rates seems to be diminishing, and high interest rates may persist for a while. Therefore, for those in need, it would be prudent to plan conservatively, considering that interest rates might remain high for the next three to five years. If you can manage to buy a house, it would be wise to focus on properties that have significantly dropped in price compared to their peak. It seems reasonable to keep the financial plan conservative for now. Before we wrap up, we will select two participants to receive movie vouchers for two screenings each through a quiz.

I prepared it. The housing prices are affected by supply. What is not a leading indicator of how much housing will be supplied in the future? 1. Inventory quantity 2. Construction quantity 3. Sales quantity. Now, you can access the JTBC News YouTube channel, which is broadcasting Money Class live, and post your answers in the real-time comment section. At the end of the broadcast, we will select two winners and announce them. We have been talking with Kim In-man, the director of the Real Estate Research Institute. Thank you.

"이제 새집 없어요" 2025년 집값 폭등 온다?｜김인만 부동산연구소장 #머니클라스 / JTBC 상암동 클라스

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