Real estate is difficult, right? But what I want to talk about is that it will take about 30 to 40 minutes; it’s not too long. When we look towards the future, we need to be able to distinguish between the distant future and the near future. It’s important to differentiate between two years from now and twenty years from now. I have experienced this firsthand. It takes me almost two hours to walk around Yeouido. I walked around there last winter, and there were definitely a lot of people. Some people thought it was a baby, and when they hit it, they ended up getting injured. If you only look at things like that, you may not understand the current housing prices. So, when you look at the market, you need to have a balance; this balance is the most important thing. Right now, we need to worry about population issues, supply and demand, and what we should be concerned about is supply.

It's a time for concern. Now, people are experiencing a population shock, and this has brought about fear. This is a stimulus to our amygdala. So, it’s easy to think that everything is going to end in a catastrophe. But now, it’s hard to understand the stock market, right? The price of apartments in Seoul has already increased by about 6.6% this year based on actual transaction prices, while last year it rose by 10%. In total, it has gone up by almost 15% or more during this period. How do we interpret this? When looking at real estate, I think it’s better not to draw conclusions beforehand. Instead, analyze the market with a blank slate. This is because our theories are often too disconnected from reality. What will happen in the future? One of the most prominent features of the real estate market in the era of population decline is polarization.

In a society of extreme disparity, or what you might call extreme polarization, this is often expressed as the great divide. Because of this characteristic, we can see that those who are rising will rise even more, while those who are falling will fall even further. So, I want to emphasize this point first. I urge you not to approach the population issue too vaguely or superficially; instead, you should delve deeper. If you view this fear in a vague and impressionistic manner, it can be overwhelming. However, if you dissect it piece by piece, you can gain a more objective perspective and develop your own insights. In that regard, the most important thing is not to look at the world purely theoretically. That approach often doesn't align with reality. I wanted to convey that message, and so I have a few points to discuss.

I would like to share a few tips with you. Let's take a look. After all, once the lecture is over, we tend to forget everything, right? We don't remember much at all. So, if you can just remember one thing that I mention, that would be great. 

There's a French philosopher named Comte who said, Population is destiny. This means that the fundamentals of a country's economy are based on its population. Isn't that true? However, our population has been decreasing for about four years now. Of course, this mainly refers to the domestic population. Last year, the number of foreigners increased slightly, so the overall population grew a bit, but the domestic population continues to decline. 

When looking at the housing market, generally, we tend to focus on the number of households. Of course, it would be good to consider both aspects. According to the statistics office...

Officially, it is said that the population decline began nationwide in 2020, and the metropolitan area is expected to see a decline in 2036. However, the number of households is projected to start decreasing around 2040. There are voices suggesting that if the low birth rate continues as it has recently, the decline in the number of households might happen sooner. Some extreme predictions even claim that the number of households could decrease by 2034, although this is not yet an official statement. Regardless, it is uncertain what the National Statistical Office will decide, but according to population and household estimates, a simultaneous decrease in both population and households is expected around 2040. Many real estate studies suggest that a population shock will begin around 2040, based on various demographic data, particularly from the United States.

We are now talking a lot about things like models. Additionally, climate issues could become more serious in the future. For instance, in Wonju and even in Hwacheon, they are experimenting with banana cultivation, which shows how hot the country is overall. Therefore, we can foresee that problems such as landslides, coastal issues, and flooding may become serious. 

Moreover, this phenomenon of climate gentrification can be observed in places like Europe and the United States, or even in the South Pacific. Gentrification refers to the phenomenon of nesting, which you might know. For example, when certain areas like Seochon and Bukchon develop their commercial districts, suddenly the rents increase, and residents are forced to leave. This is what we mean by nesting.

내몰림이라고 이야기를 하는데, 젠트리피케이션이 있습니다. 기후 젠트리피케이션이란 무엇이냐면, 원래 부자들이 해안가에 살잖아요. 그곳은 회수하기도 좋고 여러 가지 풍광을 즐기기도 하니까요. 그런데 그 지역이 침수가 되버리면 결국 그곳에 있는 부자들은 다른 곳으로 올라가고, 구렁지대에 살던 저소득층이 오히려 해안가로 쫓겨나는 상황이 발생합니다. 이게 대표적인 기후 젠트리피케이션의 양상인데, 아직 우리나라에서는 그 정도로 걱정할 필요는 없습니다. 나중에 아이슬란드 같은 곳에서 얼음이 다 녹으면 인천공항까지 물이 잠길 수 있다는 얘기도 나오고 있지만, 지금은 큰 문제는 아니지만 향후에는 중요한 변수가 될 수 있습니다. 그래서 앞으로 자연재해가 좀 더 일상화될 수 있는 측면이 있습니다.

In the future, landslides are expected to occur frequently, which makes urban living increasingly important. This is something that is often discussed. I also say, as a passing remark, that on hot days, a cool place is ideal. I made that up. Traditionally, there was a concept in feng shui that south-facing homes were considered good, but now it seems that a southeast orientation might be more favorable. The key is that it shouldn't be too hot in the summer. I am contemplating these ideas.

As I mentioned earlier, the extreme polarization and the gray divide could be significant characteristics of the future. The concept of the Matthew effect refers to the extremes in space, which could lead real estate to become either a blessing or a curse, even a grave. There are various perspectives on this matter.

In the countryside, rice paddies and fields can now be considered significant assets. Interestingly, in rural areas, you might not hear the sounds of farming, but rather the sounds of competition. The elderly, who are nearly 90 years old, can no longer farm. This indicates that the market is rapidly engulfed in the whirlpool of aging. It seems that there will be a division, and in the future, when looking at local areas from an asset perspective, we will see that not entire regions or districts will survive, but rather only points will remain. Typically, we say that points gather to form lines, and lines gather to form areas. However, it appears that this will reverse in the future. Therefore, these trends are likely to emerge, and urbanization will become more pronounced than church activities. This is because the MG generation fundamentally thrives in urban concrete environments.

Next, the generation currently in their twenties will be succeeded by Generation Alpha, which will lead the market. In this context, we can see a transformation in the world driven by a generation accustomed to concrete and asphalt culture. The future will involve smart cities and various concepts from Japan, such as urban regeneration. For instance, if you look at developments like the Rokbon or Midtown, they represent the trend of high-rise buildings and mixed-use facilities becoming the norm. This phenomenon is referred to as the Menant phenomenon, where there will likely be a significant increase in high-density residential facilities. Therefore, I believe that the housing market may begin to feel the impact of a demographic crisis starting in 2030, especially in rural areas. However, looking at the bigger picture, when considering the entire country, the population and the number of households will...

As the population decreases over the next 40 years, there may be some shock. I believe this is the case. As I mentioned earlier, if we cannot distinguish between the near future—two years from now—and the distant future—twenty years from now—our minds may become overwhelmed. So, as I said, it's about finding a balance. You can think of the population as a telescope for viewing the distant future. You can't use it as a magnifying glass. However, many intellectuals tend to use this telescope as if it were a magnifying glass. If we try to explain the real estate market using the current population, it doesn't quite fit. Recently, in our country, you might be aware that, looking at Japan's example, they do not build single-family homes. In Japan, the living space has decreased by about 10% over the past ten years. Looking at Japan, we can see this trend, but recently in our country...

If you apply the same logic to the market, what happens? Then the argument for the collapse of apartment prices is persuasive. However, recently, the prices of apartments have actually increased. Why is that? It doesn't make sense. 

You should look at the supply volume as well. In the early 2010s, when there was a lot of supply for medium to large-sized apartments, meaning those over 85 square meters, the supply volume exceeded 30%. At its lowest, it dropped to about 5 to 7%. This refers to the move-in volume. What I mean is that we shouldn't fall into a simplistic view. After all, there are only single-person households now, right? 

So, the trend is indeed for 25-pyeong (about 60 square meters) apartments. That's correct. However, the current phenomenon is that since large apartments are not being built, their prices are...

이런 현상들이 많이 나타나고 있습니다. 그러니까 단기적인 어떤 흐름이 장기적으로 어떻게 보면 시장을 가늠하는 잣대인 인구를 가지고 쓰면, 약간 오차가 심하게 날 수 있습니다. 인구 만능론은 다소 험할 수 있죠. 그런 측면에 대해 제가 조금 말씀드리는 겁니다. 그런데 이제 재밌는 것은 앞으로 거래 회전율이 뚝 떨어질 것이라는 점입니다. 거래가 많이 줄어든다는 건데요. 실제로 일본의 경우, 2013년에는 굉장히 안 좋았던 시기였습니다. 제가 일본의 주거용 부동산 통계를 살펴보면, 일본에서 집값이 가장 쌌던 때는 언제냐면, 헤세이 버블 때입니다. 그때 1989년 1월이 정점이었고, 주식은 1989년 12월에 4만 근처까지 갔죠. 그런데 일본은 보통 주식보다 약 2개월에서 2년 정도 늦게 움직입니다.

When looking at residential real estate, if we ask when the lowest point was, it would be October 2012, which was the lowest index for Japanese real estate. Then in 2013, there was a significant drop in transactions, meaning that sales plummeted. In South Korea, the housing transaction turnover rate over the last five years is about 5.5%. This rate may continue to decrease in the future. However, there is a relative population shock, especially in areas with a lower average age or affluent neighborhoods, which can be considered relatively safe zones. In non-capital regions, places like Sejong, Busan's Gangseo District, Gwangju's Gwangsan District, and Ulsan's Buk District tend to have a younger resident age group. Most of these areas have overlapping business districts, so if we look at them by district,

In our country, among the areas with a younger demographic, Gwangju Suwan-dong has a relatively lower average age. Following that, in Busan, there’s Myeongji-dong, particularly in the Myeongji International New Town, which also has a younger age group. Therefore, the market in these areas experiences the shock of population decline relatively later or less severely. This is ultimately because the concentration of young people in these residential areas is higher, meaning the average age is lower. In places where children are more active, like up to age 12 or even 13, the impact of population decline is relatively less noticeable. It seems we need to act quickly.

Now, I would like to briefly discuss the Japanese housing market. This situation is described as an extreme legal crisis or a legal collapse. Interestingly, if you listen to NHK news all day, they don't report whether housing prices have risen or fallen. How can I explain this?

Did you know? A few days ago, on my way home from work, I encountered a person in our neighborhood who runs a photography studio. This person suddenly called out my name, and I was startled. When a stranger calls your name and asks you to come over, it can be quite surprising. This person mentioned that they had seen me on TV. I also appeared on TV this year; it’s been nearly 20 years now, almost 19. However, I prefer not to be well-known. You see, for a real estate expert, it’s better to remain low-profile. It’s easier to avoid unnecessary criticism. This person, despite only having completed elementary school, is quite remarkable. They have self-studied and advanced their education significantly, which is impressive for someone with such a limited formal education. This individual is very intelligent and possesses a great deal of curiosity.

When we learn about Japan, what is the first thing we want to see? It's Japanese programs, right? I keep NHK on all day. However, this person is talking to me. I've been watching this for two years, and even though I watch it during the day, they've never mentioned the titles. Isn't that a glimpse into our future over the next 20 years? I've thought about this a bit. Now, we have this fear, and in a way, this fear of collapsing laws is something that heavily weighs on our lives. This psychological mechanism, when we look at it, is significant. There’s a psychological term called the availability heuristic. What this means is that it's a kind of cognitive shortcut. It refers to how we perceive the world through a certain lens, and the reason is that humans...

It's an overload of thoughts. There is too much information, and when people experience cognitive overload, they tend to have a desire for cognitive closure. They want to quickly reach a conclusion, thinking, Oh, this is too much for my head. So, they end up concluding prematurely. This refers to the tendency to listen vaguely and jump to conclusions. For example, when we think about airplane accidents, we only recall the worst-case scenarios. However, the probability of an airplane accident is about 1 in 5 million, while the odds of winning the lottery are about 1 in 830,000, and train accidents also have similar odds of around 1 in 5 million. Yet, it seems like we excessively dramatize and imagine only extreme scenarios, which contributes to our growing fear. This is somewhat similar to the experiences of medical students.

In terms of mental health, medical students often worry excessively about their health. When they study diseases, they might think, Oh, my stomach hurts. What could this be? Is it something serious? This kind of health anxiety is somewhat similar to certain laws in Japan. Let me provide some updated statistics, as the numbers can be a bit misleading. 

Japan's population peaked in 2010, and it has been declining for about 14 years. I found that approximately 3.6 million people have decreased during this time. The population of Busan is just under 3.3 million, which means that the population of Busan has effectively decreased by one. However, if you look closely at the recent housing prices in Japan, you can see that they have been rising slightly. I did some research on this, and Japan...

Since 2011, I mentioned that there would be a decrease. However, I previously stated that the value was for the year 2012. Statistically, after the population began to decline, how much have housing prices increased? This is about 38.4% as of last April, and by the end of last year, the KB price index showed a 40.8% increase in national housing prices. So, if we look at the recent 12 or 13 years, Korea, Japan, and other countries have seen similar increases, right? But, as I mentioned earlier, the reason for this is that liquidity has increased. According to M2, I observed an increase of about 1.6 times in our country and about 2.5 times in Japan. The number of households has also been continuously increasing in Japan. If we look back, I mentioned that the peak was in 1991. Compared to that time, now...

The decline is still low compared to the peak, about 23.9%. However, within this context, there are many vacant houses, around 13.6%. Interestingly, tower mansions in the upper districts of Tokyo are seeing a rise in prices, while regular apartments are becoming more like luxury properties and are even renewing their record highs. This indicates that we are witnessing a form of extreme polarization. I want to emphasize that even if a population shock occurs, not all assets will collapse in the same way; rather, there will be some discrepancies. This differentiation is a prominent characteristic. Therefore, you should not fall into the trap of averages. I would like to make that point. How much time do we have left? I think we still have about 20 minutes. Understanding the trends properly is crucial.

When looking at market trends, it is important to understand that the fluctuations in the market can be categorized based on their duration. The most common are short-term variations, such as fleeting fashion trends that quickly come and go. In contrast, a trend typically lasts around five to ten years, representing a more stable pattern. If a trend continues for a longer period, it may evolve into an innovation or even a cultural phenomenon.

What I want to emphasize is that the spatial desires of the millennial and Generation Z (MG) cohorts will become significant points in the real estate market. The younger generations today have distinct spatial desires that can be seen as critical factors for their survival. This is the insight I would like to share regarding trends and their implications.

As I try to connect some thoughts, I realize that gaining insights is quite difficult. Knowledge doesn't easily transform into insights. However, we can interpret it this way: insights come from looking closely at the inside rather than the outside. So, who are the main players in the market? It's the MG generation. If we understand the desires of this generation regarding public spaces, personal aspirations, and real estate, as I mentioned earlier, we can mitigate the impact of the demographic shock. This is the core message of my lecture today. 

After COVID-19, significant changes are occurring in the market, which I refer to as Goodbye Parents, Good Morning MG. Here, parents refers to the Baby Boomers. According to Michelle Cooper of the Epise, this collective ignorance is shifting. In some ways, ignorance can be more frightening than awareness. Nowadays, the younger generations...

Now, there is talk about the cat generation, which refers to those who enjoy being alone and have a somewhat chic demeanor. When one person is missing, it can feel quite deep, and it can also be a bit challenging. There seems to be a tendency towards isolation, and I see this as a characteristic of the current preference for non-face-to-face interactions. Nowadays, even within families, people don’t communicate as much. For example, when I’m at home, I mostly talk through KakaoTalk rather than speaking directly. It feels more comfortable. Why bother having a conversation? This non-face-to-face communication is one of the most prominent features of today’s generation. 

Another characteristic is the familiarity with space and what we call place identity. Place identity refers to the way we infuse our experiences into a location. Do you understand? Familiarity with space and this concept of place identity are somewhat similar.

When we share time and space, we fundamentally have similar thoughts. This relates to generational theories and various discussions. Basically, the younger generation these days tends to consume space very urban-oriented. Instead of concrete, they prefer green leisure activities and places like motels for outings. Older individuals may remember going to places like Daeseongri or Cheongpyeong in the past, but these days, that's not very common. It's more of an old mindset. Moreover, for swimming hotels to thrive now, the swimming pool needs to be aesthetically pleasing. People want to wear swimsuits, take photos, and post them on Instagram. This consumption is happening in real-time, indicating a trend. Product consumption is also shifting towards mobile, similar to the phonocentric era. Recently, I noticed two surveys that came out, and they reported similar findings.

A common theme is that online consumption has far exceeded offline consumption. Nowadays, even pork belly is often ordered for delivery in single servings. This raises the question of the end of alleys and the end of offline shopping, as the patterns of consumption are fundamentally changing. So, what will be the first impact on the real estate market? It will be the issue of commercial districts. The problem with commercial areas is serious; there is an oversupply, and all consumption has shifted to mobile and digital platforms. Therefore, for those planning their retirement, the most troublesome thought is the idea of buying commercial properties and expecting steady rental income. This has now become an outdated dream. In fact, many commercial spaces have been established in new towns, but they are struggling.

In a way, retirees are all trembling about the law going forward, which is serious. Recently, I met someone who is developing a new town, and they received all the commercial space allocations. These allocations were given to elderly individuals, but now that everything is empty, they can't even pay the loan interest. So, what to do? I met this person yesterday, and they said they plan to convert it into high-end officetels. They are setting up a plan for the district, and it seems that a significant portion of the commercial space is oversupplied. In the future, many of these spaces will likely be transformed into residential facilities. In the U.S., there are already many instances of offices being converted into apartments. So, I want to share more about commercial spaces. The reason for the oversupply is that, here in Myeongdong...

When you go to Myeongdong, Jongno, or Cheonggyecheon, every new building has commercial spaces in the basement. These are also great dining spots. It's important to understand that not all commercial spaces are visible; there may be many more that are not seen. So, in a way, the flow of people may not be that high, but since every new building is incorporating commercial spaces, such phenomena are occurring. 

Recently, I think the younger generations do not distinguish between investment income and labor income. They also have little interest in land. Even though they enjoy car camping, they do not consider it an investment. The most notable characteristic of this generation is that they equate apartments with real estate. Nowadays, there aren't many land experts or real estate agents. The biggest trait of the current generation is the YOLO (You Only Live Once) style. They do not engage in wealth management and have a mindset of enduring hardships.

Recently, there has been a trend in the real estate market that relates to the generation that believes in the whale. You may have heard about this issue. Essentially, the trend connects to the real estate market, particularly regarding new constructions. Over the past year, apartments that were built within the last five years in the metropolitan area have seen the highest price increases. 

It seems that the main driving generation in the market affects the flow of the market. However, it appears to be somewhat variable; it seems to fluctuate. Just about six or seven years ago, gap investing was the biggest trend in the market. People in their 20s and 30s, who typically didn't have much money, were heavily engaged in gap investing. But what about now? People are no longer investing in gaps; the focus has shifted to what kind of house to buy.

In their late 30s to early 40s, young mothers are buying homes as their living spaces. This is supported by statistics. Now, why is that? If you look closely, you might find people from the 1982-born Kim Ji-young generation. The 1982-born Kim Ji-young generation can be linked to the current real estate market. The novel Kim Ji-young, Born 1982 was published in 2016, which was eight years ago. At that time, Kim Ji-young, a newlywed, was living in a 24-pyeong (approximately 79 square meters) rental in the outskirts of Seoul. She was 34 years old then. What money did she have? So, she made a small investment through gap investing. At that time, looking at the KBC rental statistics, the ratio of Jeonse (a type of lease) for apartments in Seoul had soared to 75% in June 2016. Back then, you could engage in gap investing with very little money. There wasn't much to lose; it had only been a short time since entering the workforce.

Because it didn't work out, how is it now? Currently, the rental ratio has dropped to 54%. Now, if you want to invest in a gap in Seoul, it costs 610 million won. It's beyond reach, so people are not investing in gaps. Even those in their 20s are not buying. Back in 2021, when house prices were at their peak, the investment ratio of those in their 20s purchasing apartments in Seoul was about 6%, but now it has dropped to 2%. Recently, there have been reports that those in their 40s have surpassed those in their 30s. This means that the Kim Ji-young generation is buying houses. Where have house prices risen the most in Seoul? In the past, areas like Sangye-dong had cheaper houses, so many invested in gaps there, but nowadays, it is clearly shifting towards new apartment complexes in more livable spaces. Therefore, the area where house prices have risen the most in Seoul over the past year is Gangnam.

No, the area that has received the most attention is Seongdong-gu, followed by Gwangjin-gu. Seongdong-gu, especially around Okus-dong and the Geonbo-dang area, has many three-family houses and offers good accessibility to the city center and Gangnam. Gwangjin-gu is known for having a good educational district. So, the market right now is quite variable, but there are some trends. These trends tend to change every five to ten years. Currently, I would say the trend is not gap investment but rather a demand for upgrading. As you know, with the easing of loan regulations, this phenomenon has also emerged. As I mentioned earlier, trends do not last forever; you should consider them for about five years. The MG generation fundamentally prefers apartments, and there is also a cultural aspect to this.

If you look closely, the younger generation treats investment like a game. They seem to approach it almost as if it were a game. This generation is the one with the highest financial intelligence. However, they tend to be a bit impatient and have a strong tendency to try to surpass the older generation quickly. They express their desire to acquire apartments as if they were playing a game, referring to it as apartment treasure hunting. It's as if they are buying concrete blocks. This trend is evident. 

As for the older generation, the baby boomers, they have often been described as a generation addicted to real estate. However, since that term has a negative connotation, I prefer to call them a somewhat real estate-friendly generation. This is because even when they receive apartment allocations, they still carry the memory of having become middle class. Therefore, in terms of finance, they are still not very knowledgeable and tend to be more passive, focusing primarily on real estate.

If you focus on the aggressive approach, you can see that in large cities, couples are selling their homes and typically, it's just the husband who goes to the countryside. This leads to what we call weekend couples. Additionally, there's a tendency for people not to think of their countryside homes as a place to live, but rather as a condo or a pension. This has become a prominent feature recently. Multi-habitations and second homes will likely become more active in the future. However, many of the current generation also come from rural areas, so I don't think the investment value will be significantly high. The market has changed a lot recently; the most notable characteristic is that the accuracy has increased significantly. It has become a market where the power is in the public sphere, the intellect is in supercomputers, and the speed is incredibly fast. This is what I want to convey.

Now, we can even reach the quantum level, meaning that everything is interconnected in the current market. This thought often crosses my mind. These days, boundaries and stereotypes are collapsing, and I believe this trend will intensify in the future. You know about staycations, right? It's when people take vacations without traveling far, enjoying leisure time at nearby resorts. Then there's workations, which combine work and vacation. A staycation can be viewed as spending time at home, possibly in a specific room. Recently, we have been seeing a shift in art towards mixed-use residential spaces, which is referred to as home-cono. This trend integrates living, working, leisure, and health functions, making community increasingly important. I believe we are entering an era where the traditional three-meal structure will evolve. We are witnessing the arrival of a new era of flexibility. If you look at apartments, they are transitioning in form. In this new era, I find that I don’t eat at home as much; if I do, I can quickly overcome it.

이거 한번 보여 드릴까요? 얼마 안 남았는데, 이게 어디냐면, 중국에서 우리 중경 임시정부 아시죠? 예, 중경. 거기 구가 2천만 넘습니다. 중경인데, 거기에서 삼대까지 내려오면서 제가 찍은 거예요. 이게 중경 외곽입니다. 뭐예요? 다 이거 해운대 갔잖아요. 이게 뭐예요? 맨해튼 같잖아요. 그러니까 동아시아의 특징은 뭐냐면, 최근 제가 공부를 해보면 한국이나 중국이나 일본도 전부 다 약간 맨해튼 되는 게 두드러진 특징이라고 보시면 됩니다. 그렇죠? 이게 제가 보여 드리고 싶었던 건데, 여기 재밌는 것은 여기에 장강이 있고 양재강이 있습니다. 여기서 어 고기보다 핸드폰이 더 많이 산다 이런 말이 있습니다. 예, 사진 찍다가 다 떨어뜨려서 고기들이 많이 잡히는 것보다 핸드폰이 더 많이 산다는 거죠. 그래서 제가 드리고 싶은 거는, 앞으로 주택...

It seems that the market for apartments is going to get quite serious. Currently, our country has about 1.26 million apartments, which account for approximately 64.6% of the total housing market. Back in the 1970s, this figure was only 0.8%, and at some point, we became a republic of apartments. It’s a complicated situation. So, I wanted to mention earlier about the space for the MG generation. Ultimately, the most important aspect when discussing this trend is that we need to be fast followers; we must quickly adapt to the flow. Knowledge has an expiration date. The knowledge we possess might be like expired milk. This is often referred to as the knowledge economy, where about half of knowledge transitions into something else. In economics, this transition period is only nine years.

You need to continue to expand your learning and memory. I keep mentioning this, and I want to say that, as our representative Park Se mentioned earlier, I believe that we, as real estate experts, should also look at the younger generation. They often say not to study real estate but to focus on financial education, especially for young people living in rural areas. This is because the trend is no longer in real estate. What is the trend now? The trend is shifting from local to global, from real estate to finance, and from face-to-face interactions to non-face-to-face. The flow itself is changing. Therefore, real estate is primarily a local and face-to-face asset, and you should reduce its proportion by 50% in the long term. This means that the focus should shift to global financial assets. Many retirees are worried.

What I'm saying is that those involved in finance or those who held positions in finance commonly lack knowledge about it. They really don't know much. Of course, there are many who are interested, but most people are not well-informed. So, in my opinion, looking at the overall direction, I think we're entering an era where we will be betting on global financial assets, excluding our homes. I believe this might be a relative safety zone or a survival strategy as we navigate through the population shock. Also, regarding homes, they reflect the desires of the younger generation, particularly in areas with a younger demographic. So, focusing on outskirts rather than urban centers might be a way to find relative safety, as there are no absolute safe assets.

Many people have a significant misunderstanding: they are looking for magical solutions and products. There are no such things. How can we cope with the fact that the population is declining? How will we navigate into a red ocean? What will be my means of survival? What I want to convey today is that I recommend allocating more than 50% of your assets towards global finance. Secondly, instead of focusing on my own desires, when I consider the spatial desires of the younger generation, specifically the MG generation, I can mitigate the impact of the population shock. Therefore, I suggest that if you understand the spatial desires and consumption patterns of women in their 30s and 40s, we can gain significant insights not only in the real estate market but also in other investments.

I will wrap up with this and then have a Q&A session. I appreciate the second lecture and the presentation on the second topic. Our chief expert, Park Won-gap, is currently one of the top leaders in the real estate field, and I have learned a lot from his insights today. Lastly, he suggested that aside from real estate, we should consider investing in overseas assets, and I believe we will discuss that topic further in the remaining sessions. 

First, I have a question regarding the content presented by our representative, Park. He mentioned the possibility of interest rate cuts. It seems that in October, there is a high likelihood that our country will also lower the benchmark interest rate. My question is about the government's response to the skyrocketing housing prices in Seoul and the accompanying increase in household debt levels.

I'm currently in quite a dilemma. The two conflicting factors are the interest rate cut and household loan regulations, which raises the question of how housing prices will trend. This can be viewed as a short-term forecast, perhaps over the next two to four years. I have a question about this. When I look at the market, I mentioned that the most important thing is that interest rates are rising while loan mechanisms are a negative factor. These two variables are playing a tug-of-war. Personally, I believe that key areas in Seoul have already priced in expectations of an interest rate cut. This is because the mortgage interest rates have dropped to around 2%. Additionally, there has been a renewal of record-high prices. Given these points, I think a significant portion has already been factored in.

The market is more sensitive to interest rate cuts. In the provinces, house prices are lower, so people don’t take out many loans. However, it is said that the expectations regarding whether house prices will rise after an interest rate cut play a significant role in decision-making. In the provinces, this is the case, but in Seoul, it is fundamentally similar to the metropolitan area. People tend to take out more loans because they are buying homes. Looking at various studies, particularly in Seoul, it appears that lending regulations have a much stronger impact than interest rate cuts. There are many analyses that support this view. Therefore, I believe that in the case of Seoul and the metropolitan area, the transaction volume in areas like Gyeonggi and Incheon will not decline drastically. This is because house prices are lower, and some demand is shifting away from Seoul. However, in the core areas of Seoul, I think there is a possibility that lending regulations will tighten, leading to a selection pattern in transactions. But...

It won't drop immediately because it seems to be following a pattern similar to last year. If we look back, the transactions for apartments in Seoul peaked in August of last year; that was when the market was most active. From September, the prices reached their highest point, and then there was a correction for about three months starting in October. Currently, with the loan regulations and the suspension of the special housing loan program we implemented starting September 27 last year, along with the halt of the 50-year mortgage, the impacts are similar, right? However, the decline in house prices that began in October last year was, in my view, influenced by the U.S. Treasury yield briefly exceeding 5%, which caused a shock in the bond market. But now, that situation is absent, and it seems that interest rates might decrease. Therefore, a lower interest rate in the current market signifies a supply of liquidity, right?

I don't think housing prices will drop significantly. In my opinion, the market will stabilize until the end of the year. In fact, the local markets are not experiencing a rebound; they are simply not dropping further and are consolidating at the bottom. If you look at the local apartment index, it increased by 0.2% in July, and June also showed positive growth. While there are some variations in the local markets, many people assume that prices in these areas will inevitably fall, which is a very dangerous mindset. Ultimately, all asset prices will rise if inflation increases and the economy grows; it's just that the rate of increase may differ slightly. All assets tend to move in sync, but the rates of change can vary. When interest rates are lowered, as our representative mentioned earlier, there are aspects that haven't been reflected in the market yet, such as land, commercial buildings, and offices.

Well, from what I see, right, that area seems to be experiencing a slight increase in transactions, almost like a timely rain. In conclusion, the Seoul apartment market has largely been pre-reflected, so the effects of interest rates are not significant. However, apartments outside of Seoul, in the metropolitan area such as Gyeonggi and Incheon, will see a bit more transactions. Ultimately, the non-apartment sector will have a somewhat relieving effect, and that’s how it should be viewed.

Now, there's something that has changed recently. In our country, the proportion of fixed-rate mortgage loans as of July is quite high. For new loans, it’s about 96%, and in terms of outstanding loans, it’s around 64%. This high percentage of fixed rates means that as interest rates drop, there will inevitably be some distance, right? Back in 2013, our fixed-rate proportion was only 23%.

It's done. Right now, the balance rate is at 64%. It has gone up. Looking at Japan, the variable interest rate mortgage last year was around 80%. Japan is different from our country. So, it's clear that the increase in the proportion of fixed interest rates is more influenced by the impact of loan regulations rather than a decrease in interest rates. This needs to be viewed from multiple angles. In terms of interest rates and the intensity of loan regulations, it can be said that the loan regulations will be stricter. The next question is a follow-up to what you mentioned earlier. In each region, especially in high-priced apartment areas in Seoul, the rate of increase is not that high. Rather, it is relatively...

You mentioned that prices are rising significantly in areas with lower costs. From a parent's perspective, what areas might be promising for children in the future? Have you analyzed any regions that are considered good investment opportunities? While there are still some affordable areas in Seoul, are there specific locations that you believe will do well in the future? If you could share your strategic insights on this, it would be helpful. I understand that we shouldn't talk about real estate too much in public, but I want to offer a tip. Recently, I've noticed two trends in the real estate market. First, you should not look at areas purely by administrative divisions; instead, consider them by living zones. Ultimately, it relates to places like City Hall and Gangnam Station.

Between commuting and accessibility, this is the true essence of Seoul. I would like to suggest that you view it not just from an administrative perspective but as a living area. Secondly, consider whether 35-year-olds want to live there; that is crucial. The reason is that this demographic shapes pricing and trends in the market. If my daughter were not yet 35, I would suggest asking her sister. Just by asking one question, you might find the answer. My son is currently living there, and the kids who are a bit older, around their mid-teens, I plan to ask them as well. What I always want to emphasize, especially to older generations, is that they cannot detach their values or experiences from their judgments. Instead, they should always consider where younger generations want to live.

If you look at where their desires lie, I think the answer will really emerge. So far, our chief expert, Park Won-gap, has shared many good insights and provided us with useful information that we can take as tips. Up until now, Chief Expert Park Won-gap has presented the topic and answered questions very diligently. Let's give him a round of applause to express our gratitude.

박원갑 부동산수석전문위원, "30대 여성 공간 욕망이 아파트값 좌우한다"

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