Real Estate Panic Buying

Hajon Lee

Korea has had its ups and downs with real estate. One of the most controversial and seemingly difficult problem the government cannot solve is the continuous increase in real estate prices. House price does not seem to be adjusted or stopped, they keep on rising and they have become unstoppable. The government has put regulations for example, unable to buy a house if there is 1million dollar in debt. The government has also increased the tax house-owners have to pay for keeping these houses.

To be able to explain the current situation in Korea there is a lease where they pay the amount and get the exact amount back when their contract is over. The price of these leases are going up so people in their 20s and 30s are panic buying houses because they are predicting that price houses will just keep going up and that they would have to buy the house before the price goes up even more.

In Seoul, people in their 30s purchased apartments with a share of 38 percent topping it the highest record ever and with 20s they would take about 44 percent. The buying spree has increased due to growing anxiety over their housing due to the deepening shortage of the lease. For the 20s they will have a greater impact on giving away their ownership by family units by imposing punitive taxes on multiple homeowners than by buying them.

Furthermore, the reasons why multiple homeowners do not sell their houses is because house prices will continuously increase and the transfer income tax is too high to sell. Naturally, it is argued that the transfer tax should be drastically lowered to induce sales. New lease rental houses stemming from the effects of law enforcement and low interest rate spreads to young people in their 20s and 30s. It will be interesting to see how the government will try and halt house price increases.