"Supply Shortage is Stronger Than Interest Rate Hikes"... Diagnosis of 'Triple Bull Market' in Seoul Metropolitan Area

The real estate market in the Seoul Metropolitan Area, including Seoul, is showing a 'triple bull market' where sales prices, jeonse prices, and monthly rent prices are rising simultaneously. In particular, an analysis suggests that the supply shortage problem is having a stronger impact on the market than the pressure of interest rate hikes.

According to a video released by KB Real Estate TV on the 22nd, CEO Choi Yoon-sung (Mango Ssem) diagnosed the current real estate market as a 'silent rally.' This means that rather than the market overheating with a surge in transaction volume, prices are quietly rising while transaction volume has decreased, meaning the price shock felt by the public is greater. Choi explained, "Those who know, know, and most people are not interested, but when they actually make up their minds to buy a house and enter the field, they are shocked because it is not the price they imagined."

"Shocking Supply Shortage Until 2030"... Supply-Demand Imbalance Heavier Than Interest Rates

Choi cited 'supply shortage' as the core driver leading the current upward trend. He explained that while interest rate hikes act as a factor to suppress house prices, the preparation for a 'super cycle' of supply shortage is already complete. He predicted that the influence of the supply shortage would be greater than the interest rate hike, saying, "Even if you add a little more weight to a very fast-running horse, the horse does not stop."

In particular, he predicted that the supply shortage problem would be serious in Seoul until 2030. Choi pointed out, "In the short term, a truly shocking era of supply will come until 2030," and "Even if construction starts now, it takes 4 years until move-in, so there is no immediate way to solve it." In fact, the supply imbalance is intensifying, with the move-in volume in 40 regulated areas recording the lowest level in 40 years. The move-in volume in regulated areas this year is at the level of approximately 16,000 units, but it is expected to decrease even further from next year.

Choi also mentioned the recent price increases in major areas of Seoul. He said, "New constructions have already exceeded 2 billion won," and "As Dongdaemun IPARK Xi in Imun-dong, Dongdaemun is being traded at 2.06 billion won, and new highs in the 2 billion won range continue to appear near Giheung U-Town in Seongbuk-gu." He added, "In the case of Mullae-dong on the Line 2 route, it is forming shocking price ranges, being traded in the 2 billion won range due to its good location and expectations for an increase in floor area ratio."

Regarding the recently reported rise in mortgage delinquency rates, he cautioned against excessive market concern. Although there are reports that the delinquency rate has increased several times compared to the past, the analysis is that this has a strong marketing character using the base effect.

In the video, Choi stated, "The mortgage delinquency rate is very stable at the 0.28% level." He explained that if you calculate the delinquent amount out of the total 780 trillion won in claims, it is only 0.28%. He explained that despite interest rates rising significantly from the 1% range to the 4.5% level compared to 2022, the delinquency rate figure has not increased significantly. He emphasized, "In the case of the United States, the delinquency rate for more than 1 month reaches 1.8%, which is about 6.5 times the level of our country," and "Considering that the delinquency rate in the US real estate market has not fallen below 1.7% in the last 10 years, our country's 0.28% is in a very healthy state."

'A Smart Single Home' Standard... "Must Choose a Price Range Capable of Handling Holding Taxes"

Regarding the criteria for choosing 'a smart single home' in a highly volatile market, he emphasized a strategic approach based on individual asset status and lifestyle. Choi defined 'a smart single home' as "the best house you can buy by mobilizing the cash you can use."

From the perspective of long-term asset formation, he presented two criteria. The first is location. He advised, "If the prices are the same, you should choose a place with a better location." The second is future value. He added, "If the location is the same, choosing a place with a high possibility of reconstruction will be helpful for asset formation."

Regarding the purchase of high-priced apartments, he cited 'the ability to handle holding taxes' as a key variable. He said that if considering ultra-high-priced apartments in the 4 to 5 billion won range in Gangnam, the burden of holding taxes must definitely be calculated. Choi suggested, "If you are approaching retirement or dislike the burden of holding taxes, choosing a house below 2.5 billion won may be realistic." He analyzed, "If the tax law amendment is finalized, the tax burden may rise, but for a large corporation dual-income household, they will be able to handle holding taxes up to about 2.5 billion won."

Furthermore, he also expressed concern about the tax system in our country. Choi explained, "While countries with high holding taxes such as the United States have a tax burden upper limit at the 2-3% level, our country reaches 150%," and "This is the reason why voices are emerging that the tax burden upper limit should naturally rise when prices rise."