There has always been something abnormal in the real estate market. How much was the Jamsil apartment at first? Was it 300 million won or 500 million won? When it rose to 1 billion won, it was called abnormal, and the media was flooded with reports. When it went from 1 billion to 2 billion won, it was again deemed abnormal. The same happened when it increased from 2 billion to 5 billion, from 5 billion to 10 billion, and from 10 billion to 20 billion won. It has been called abnormal all along. Now that it has reached 3 billion won, will it be labeled abnormal again? The real estate market has, unfortunately, always had abnormalities since the dawn of humanity.

Now, let me ask about real estate. As you just mentioned, some people say that this ultimately shows the hesitation of the Bank of Korea in lowering interest rates. The government and the Financial Services Commission are imposing loan regulations and announcing real estate policies. They are trying to lower interest rates to revive the economy while controlling household debt and housing prices.

Is it correct to interpret the recent strong real estate policies as a signal? Personally, regardless of the ruling or opposition parties, or whether it’s the previous or current administration, I believe that this is not a good situation. From a macroeconomic perspective, it varies according to interests. The viewers of this video likely have diverse interests as well. For instance, it is obvious that multiple homeowners would prefer soaring prices. However, when looking at the Korean economy as a whole, no government desires the phenomenon of skyrocketing prices. Similarly, no government wishes for a drastic decline. If we must differentiate, there may be governments that view a gradual upward trend more positively and others that might view a gradual decline positively. While there can be such differences, both surges and crashes are considered risky.

We see that the average apartment sales price is rising by 0.05% on a weekly basis. In this upward trend, if interest rates are lowered, it could further stimulate buying sentiment. There are concerns that if financial regulations are not enforced, it could lead to a price surge. The government also believes that interest rate cuts will happen in the future; the Ministry of Economy and Finance is considering this as well. Therefore, if the policy direction shifts towards lowering interest rates and aligns with the current situation, it’s like a bathtub that is filled with hot water but is starting to cool down. To prevent it from getting too cold, we need to add some lukewarm or warm water, even if just a little. It should not get too cold. In some way, from a fiscal policy perspective, there needs to be a kind of coordination, even though the two directions are different.

Interest rate cuts and financial regulations follow different trends. This is not a mismatch; rather, it is because monetary policy and fiscal policy are separate and independent. I believe that monetary policy makes its own decisions regarding interest rates, while fiscal policy considers those decisions. Recently, there has been talk about how, although many companies in our country are struggling, certain sectors like semiconductors seem to be recovering. Similarly, in the real estate market, properties in desirable neighborhoods are rising in value, while many areas across the country are still not seeing improvement. There are a lot of discussions and debates about whether this trend of specific regions appreciating in value will continue to grow or if that is not the case.

Regardless, the interest rate cut is a policy that releases liquidity, essentially giving money to the entire market. Does this mean that the upward trend is not just high but is now spreading? How should we view this? In my opinion, it will indeed spread, but I think there are some limitations to it. Let me explain that part. I believe that technical analysis is effective in the real estate market. I think there are limitations to technical analysis in the stock market because the stock market can be like a boiling pot; it can be hot today and cold tomorrow. However, the real estate market moves more steadily, like an ondol (Korean floor heating system). When it gets hot for a while, it continues to stay hot. Therefore, technical analysis is important. Our representative, Jeong Tae-ik, also often looks at the data, but now...

I will show you this on a large screen. From a technical analysis perspective, this data is captured as of June 2024. I didn't conduct any significant analysis; I simply captured the fluctuation rates of housing prices by district in Seoul, provided by KB Real Estate. As you can see, from October 2023 to April 2024, the rates were negative, and then we see one or two positive values appearing. Starting in May, the number of positive values increases. If we look at the current point in time, the rates have decreased further. By September 9, the districts of Nowon and Dobong also shift to positive. If there's anything to note about the Geumcheon district, it seems to be warming up at both ends. So, I believe there is a general upward trend regionally. I had a very cautious opinion when the housing prices in Nowon and Dobong were not increasing.

When the market is still declining, it may be a good time for those considering home ownership to think about areas where prices have not yet risen. I mentioned that it is still at its lowest point because there has not been a rebound. However, when considering how this phenomenon will develop in the future, I noted during the publication of the 2024 economic outlook that the main trend in the real estate market would be asymmetrical. This means that the gap between Seoul, the metropolitan area, and non-metropolitan areas would widen. I referred to this as an asymmetrical structure. As you can see, there is a recent development of asymmetry in prices between Seoul and the national average. I want to clarify that I am sharing this information directly by capturing the data, rather than drawing it myself. I would like to discuss the situation in Seoul.

The fluctuation rate of transaction prices has now exceeded 0.2%. This means that if it rises by 0.2% on a unit basis, simply multiplying that by 50 results in a significant increase. For example, consider a property worth 1 billion won; a 0.2% increase would be substantial. On average, prices are rising significantly. However, in the metropolitan area, it is just a moderate increase. In the case of the six major metropolitan cities outside the capital region, there are still areas experiencing a decline. I believe that this asymmetrical progress will continue to unfold in the economic outlook for 2025. There will be some areas where asymmetry increases further. Why do I see this asymmetry? Of course, there will be more regions experiencing growth. Many areas that have been declining will transition into a growth phase. However, there are still quite a few regions that have not been able to turn around from a continuous decline to a positive trend. The book presented this data.

There are regions at risk of local extinction, and these areas are increasing. Local extinction leads to further local extinction because the workforce diminishes. Small and medium-sized enterprises leave, and as they leave, the workforce migrates away as well. This is a kind of tipping point that we have now crossed; it's a surrender. That's why I referred to it as a tipping point. For instance, if there are no students, schools are merged or closed, and then the remaining students have to move somewhere else. Do you understand? Local extinction is a very dangerous situation, but it also creates further local extinction. This will significantly lead to the concentration of the population in the metropolitan area. If you take a closer look at the current government's policy direction, you will see that it encourages population concentration in the metropolitan area, such as through the creation of semiconductor clusters and GTX lines. For example, whether or not to lift the greenbelt restrictions, even if they do lift them, there will be additional housing supply.

There are policies that further exacerbate the concentration in the metropolitan area. People may wonder how housing prices can rise when the population is declining. To explain this, it would take another hour, but I would like to briefly touch on it. Yes, the population of South Korea is indeed decreasing. However, will the population in the metropolitan area decrease? Let me show you that part. The population in the metropolitan area is not decreasing. According to the statistics office, the population in the metropolitan area is projected to remain stable over the next ten years. Therefore, the notion that housing prices will fall due to population decline is one perspective. Right now, housing prices in the metropolitan area are rising, while prices in non-metropolitan areas are falling. But what about the national average price? It is also rising. This indicates that the increase in transaction prices in the metropolitan area is quite significant. As someone who forecasts average prices, I believe that even if prices in non-metropolitan areas decrease...

If there is a phenomenon of rising prices in the metropolitan area, it should be weighted averages; however, the average price inevitably deviates from the correct trend. From that perspective, I would say that it is difficult for prices to rebound in non-metropolitan areas, particularly in regions facing population decline and local extinction. It is challenging for investors and home-buyers to align their demands in these areas. In the case of regions at risk of extinction, it is more pronounced. On the other hand, in the metropolitan area, additional population concentration acts as a catalyst, thus supporting demand. Therefore, I believe that prices in the metropolitan area will drive stronger upward trends. Looking at the overall trend, even considering countries that entered an ultra-aging society before us, the decrease in population does not lead to a uniform drop in housing prices; rather, it varies by region. The phenomenon of population overcrowding and concentration continues to intensify.

Additionally, in large cities or metropolitan areas, the trend of rising prices is more pronounced, while in non-metropolitan areas, there tends to be further adjustments. From the perspective of precedents in the real estate market, it is important to look at trends rather than just whether average prices are rising or falling. I recommend considering the asymmetric trends in the real estate market and making appropriate decisions under these trends. 

While it would be best if problems could be resolved, there is a high probability that they may not be, so realistic choices must be made. However, this issue can paradoxically accelerate problems, which is indeed a concern. Nevertheless, holding onto properties in declining areas with the vague hope that things will improve is not advisable. Ultimately, we must consider the differences between local and metropolitan markets.

The gap between the metropolitan area and Seoul is inevitably widening. This can be summarized as follows: There are people who think that the current situation is concerning. Recently, for example, a 30-pyeong apartment in Banpo has reached nearly 6 billion won, which is close to 200 million won per pyeong. Some might consider this to be an excessive short-term surge. When the real estate market overheats, it can suddenly cool down if the sentiment shifts. Therefore, in the near future, are there any potential crises or risks in the economy or globally? I would like to share my opinion. From the perspective of the stock market, when examining the macroeconomy, there are positive factors.

There are many factors, but there are a few risk factors that I introduced earlier. I mentioned that these factors would create moments for the stock market to catch its breath. However, the real estate market, in my opinion, should be viewed as a movement of money. The flow of capital in the asset market is clear when you see where the money is concentrated. Sometimes, people wonder how house prices can rise when the economy is not doing well. They say, If incomes are not increasing, who is buying houses? I explained earlier that the economy and the real estate market are different; they are entirely separate. Interestingly, when the economy is not doing well, there is a tendency for money to flow even more into the real estate market. Also, some people have asked, How can people buy houses if incomes are not rising? I apologize for the expression, but right now...

It is not that I can buy a house because my income will increase over the year. Right now, the price-to-income ratio in Seoul is over double. This means that I would have to save my entire salary for ten years without spending a single penny to afford a house. Of course, there’s no guarantee that the house price will remain the same during those ten years, but one can consider that saving enough income within that time frame to buy a house seems impossible. However, can we assume that the conditions now allow us to buy a house because income has increased, despite the house prices being ten times higher? The assets accumulated during that time shift and determine the transaction prices. This is a very important concept. I recommend you think about it from that perspective. You often hear comments like, Is this house price normal? Isn't it abnormal? Is a 6 billion won apartment really normal? But let's take a moment to consider the real estate market.

Consider the market. In that case, I ask whether there has ever been a normal real estate market. If there has been something abnormal during this time, should we assume that it will now normalize from this point onward? The assertion that the real estate market is abnormal is a very appealing expression, and I would like to use such expressions too. However, I am neither a politician nor a decision-maker in policy, and when forecasting the economy and the real estate market, the term normal may sound nice, but it does not help at all in making predictions. Because there has always been something abnormal. Do you remember how much apartments in Jamsil were initially? Was it 30 million won or 50 million? When it rose to 100 million won, there was an uproar about it being abnormal. The media was flooded with reports. When it went from 100 million to 200 million won, it was also deemed abnormal; when it went from 200 million to 500 million, and then from 500 million to 1 billion, it was considered abnormal the entire time. Now that it has reached 3 billion won, will it again be labeled as abnormal?

It may be an awkward expression, but since the birth of humanity, there have always been abnormalities. Both you and I reflect a strong desire for greed, or rather, a very strong inclination to live in a good house, which is manifested in the abnormal market. I do not believe it will normalize in the future; instead, I think it will become even more abnormal. This is because many bear market proponents also claim that the real estate market is being invested in. Saying it is being invested in implies that it is likely to become more abnormal. Therefore, is it correct to say that it is normal? In the context of our country's low birth rate, house prices should fall. I also think that house prices should decrease. This is abnormal. It does not help in making projections. This is a topic that policymakers and politicians should consider when setting a direction for our economy. I always...

As someone who forecasts the economy and the real estate market, I believe that such discussions should not be included on the projection table. I think comments that do not help our subscribers are not beneficial. As you mentioned, we need to look at the movement of money. So, should we expect that by the end of 2024 or into 2025, money will be somewhat concentrated in the real estate sector? There are people, including those in the Korean stock market, who say that money should be taken out of stocks and invested in real estate. I agree with that perspective. I think more money will flow into the real estate market. The concept of US exceptionalism will continue until 2025. In the U.S., we will continue to see news about economic recessions. Nevertheless, a 1.9% economic growth rate in the U.S. is relatively good, especially for a country that holds the number one position in GDP.

No, it's really big, so that aircraft carrier operates at 1.9% Pro. It's incomparable to how our country’s utility vessels operate at 1.9%. When you think about it that way, the phenomenon of Solim towards the United States is even more pronounced. In the short term, the possibility of our country entering the MSCI developed market index is at least not feasible within a few years. Even if something gets nominated from now on, it's impossible within a few years. For example, there are various discussions in the political arena about how to handle investment taxes. There are more cases of capital leaving the South Korean stock market. Even the National Pension Service is not investing in Korea; the proportion of overseas stocks is... So, when looking at the movement of money, in a structure where interest rates are falling, money generally moves from banks to the capital markets and asset markets. And from the perspective of what kind of capital market it is...

I would like to use the expression that capital is moving more towards the American capital market. In this case, investors who are disappointed with the capital market in our country may relatively shift towards the real estate market. As I mentioned earlier, the stock market is currently facing several variables that are causing a pause, which may lead some to leave out of disappointment. However, the real estate market is not affected by these additional variables. On the contrary, there is a sense of economic recession and fear. This could make additional interest rates more attractive, increasing the likelihood of such movements.

Now, I would like to show you a key indicator: the Housing Price Outlook, or CSI. The question is, which will be higher: housing prices in September 2024 or in September 2025? When I ask the audience, most believe that housing prices will rise by next September. However, there are some who think otherwise.

That does not mean that; however, it indicates that there are many people who believe in the housing price outlook, as reflected in the CSI index. Given the prevailing sentiment that housing prices will rise, the fact that the U.S. interest rate cuts have not yet been reflected in the CSI suggests that once they are, prices will rise even more. From this perspective, I believe that there will be increased demand for homeownership and investment opportunities. In this context, the fear of missing out (FOMO) phenomenon might lead people to rely more on loans, as the increase in asset value due to rising housing prices could outweigh the burden of interest payments. This is especially true for variable-rate loans and the opportunity to switch to fixed-rate loans. I think these movements will continue. Lastly, looking towards 2025 and the era of inflation...

You have written a book on economic forecasts, and I would like to ask what mindset people who are investing in 2025 should have. If you could share some final advice, I would appreciate it. 

To put it briefly, the reason I write an economic forecast every year is to encourage people to take a look at the economy and consider the potential risks and opportunities that may arise. I want to help them visualize the economic landscape of 2025. 

First, when you draw this picture, if you identify any risk factors, you should focus on overcoming or circumventing them. Conversely, if you find opportunity factors, you should prepare to seize those opportunities. In other words, let's create a day of preparedness. I hope that through this video or this book, you can find some help in creating that prepared day.

I would like to share my thoughts with a hopeful heart. The outlook is indeed quite challenging, and there are so many variables involved that it makes things difficult. However, writing economic forecasts is important as it provides readers or viewers with information that can help them make better choices. I think that’s quite valuable. I also plan to read this book and consider how to manage investments next year.

Today, we had a discussion with Director Kim Kwang-seok, covering various topics from global economic outlook to the real estate market. I would like to thank you once again for watching. I will also say goodbye to the director now. Thank you for being here today. Thank you.

"그동안 비정상이었습니다" 앞으로, 집값 이렇게 됩니다 [김광석 실장 3부]

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