Residential real estate defies all attempts to tame it
The percentage of Korean residences owned by individuals, as opposed to public housing, continues to decline, and the gap between the most expensive and the cheapest residences continues to widen.
Among residences, including houses and apartments, 16 million units were owned by individuals, up 1.8% from the previous year. This represents 86.2% of the total, a ratio that has been declining since Moon Jae-in took office in 2017.
In 2019 the ratio was 86.5% and at the start of this administration it was 87.4%.
The Moon government tried from the outset to lower house prices. But all of his efforts, from tightening lending to raising taxes on homeowners, have had the opposite effect of what was intended. Prices have risen even faster and finding affordable housing has become more difficult.
Another reason for the housing shortage is the increase in the number of people living alone.
There has been a greater increase in the number of people who no longer own a home than those who buy their first home.
Last year, according to Statistics Korea, there were 570,000 more people who owned a residence but currently do not, an increase of 4.2% year-on-year.
For the first time since the compilation of the data in its current form began in 2015, the total number of families who do not own a single residence has exceeded 9 million.
During the same period, 980,000 people first became homeowners, an increase of 2.7%.
âThe prices of the residences have risen as the estimated value has risen sharply,â said Cha Jin-sook, head of the statistics agency.
As part of its efforts to further tax real estate, the government has increased the market value ratio in the assessment of home values. In 2019, the assessed value was 68% of the market value, which rose to 69% in 2020 and 70% this year.
A shortage of apartments in high-demand cities like Seoul has also pushed up prices.
The gap between the most expensive and the cheapest residences has widened further.
The government’s estimated average value for the residences of the top 10% was 1.3 billion won. The cheapest 10 percent averaged 28 million won.
That’s a 47-fold difference.
In 2019, the difference was 40 times.
The gap widened mainly due to an increase in the value of the top 10 percent. In 2019, the average value was 1.1 billion won. That’s an 18 percent increase.
While the cheapest 10 percent only increased 3.7 percent.
The Moon government hoped that the owners of several residences would be forced to sell them. But its success has been limited.
Some 84 percent of homeowners own only one home. Those who own two or more accounted for 15.8% last year, up from 15.9% in 2019.
BY LEE HO-JEONG [[email protected]]