"Supply Shortage is Stronger Than Interest Rates": Diagnosis of Seoul Apartment 'Silent Rally'

The Seoul real estate market is showing increasing volatility, exhibiting a 'triple rally' where sales, jeonse, and monthly rent prices are rising simultaneously. In particular, the supply shortage issue is emerging as a key variable in the market, with analyses suggesting that the impact of the supply shortage is acting more powerfully than the trend of interest rate hikes.

Supply Shortage Continuing Until 2030 and the 'Silent Rally'

According to the analysis by CEO Choi Yun-seong presented by KB Real Estate TV, the current Seoul apartment market is exhibiting a 'silent rally' pattern where prices are quietly rising while transaction volumes have decreased. In particular, the apartment supply shortage in Seoul is projected to be serious until 2030. The explanation is that even if construction begins now, it takes about four years until actual move-in, so the situation where the confirmed supply volume is insufficient is bound to persist in the short term.

This supply and demand imbalance is putting pressure on price increases. Recently, the prices of new apartments in the outskirts of Seoul have surged, and new high prices exceeding 2 billion won are appearing in areas such as Imun-dong, Dongdaemun-gu or the Seongbuk-gu area. In particular, the upward trend of apartments priced below 1.5 billion won, which are of high interest to ordinary citizens, is prominent, and changes in the market are appearing, such as some areas like Nowon-gu recording the highest weekly growth rate in 500 weeks.

Market Diagnosis on the Impact of Interest Rate Hikes and Loan Delinquency Rates

Regarding the impact of interest rate hikes on house prices, an opinion was presented that the difference between the economic growth rate and the base interest rate must be examined. For an interest rate hike to become a variable that catches house prices, the gap between the interest rate and the economic growth rate must be sufficient; under the current structure, the analysis suggests it is difficult for the influence of interest rate hikes to overwhelm the variable of supply shortage. This leads to a metaphor that it is like attaching a heavy weight to a fast-running horse, making it difficult to completely stop the upward trend.

Regarding the recently concerning loan delinquency rates, the possibility of a statistical illusion was mentioned. While some media outlets are reporting that delinquency rates have surged, the actual mortgage delinquency rate appeared to be at the 0.28% level. This is a relatively stable figure compared to the mortgage delinquency rate in the United States, which exceeds the 1% range, and the basis provided is that the loan structure itself is being managed healthily, such as the fact that loans for multi-homeowners are being restricted due to loan regulations (DSR, LTV, etc.).

Asset Management Strategy: 'One Smart Home' and Considering Holding Taxes

In terms of asset management, a 'one smart home' strategy based on an individual's available cash is emphasized. The analysis suggests that if the price range is the same, it is advantageous to choose a location with better accessibility or to consider complexes with high reconstruction potential for long-term asset formation.

Additionally, when purchasing high-priced apartments, the burden of holding taxes must be calculated. When purchasing ultra-high-priced apartments in areas such as Gangnam, it is important to judge whether the holding tax incurred can be handled by the individual's cash flow. As the tax burden may change depending on tax law amendments, etc., it was advised that for those approaching retirement or those with limited cash flow, a strategy of selecting houses at an appropriate price range by considering the holding tax burden is necessary.

Source: original video (YouTube)