The Invincible Myth
In Korea, real estate is classified as an investment asset.
The biggest reason for that?
Because it has never once crashed.
It has taken corrections, sure. Even those, compared to other assets, amount to little more than a drop in the ocean.
Back in 2008 the KOSPI was cut in half. Individual stocks got sliced down to a tenth of their value. Real estate stayed relatively safe. Prices simply did not fall hard.
"Isn't it different from stocks, which are risk assets? A house is also essential living space, after all…"
"Exactly."
"Pardon?"
"That's precisely the reason."
The whole thing is actually deeply strange. If real estate were truly a conservative asset, it shouldn't rocket up either.
It refuses to fall on the way down. On the way up, you can barely tell it apart from stocks or crypto.
There is a reason for that, of course. The peculiar nature of Korean real estate comes from the law itself.
The price per unit area of land surveyed and publicly announced by the government.
Used as the baseline for collecting property and related taxes.
The law itself has been engineered so that real estate prices are hard to push down.
"They nearly doubled the Officially Assessed Land Price this time."
"Is that so? What kind of effect does that have?"
"People stop being able to sell their real estate."
The government simply fixed the number. In doing so it violated the capitalist principle of leaving the market free—so of course there would be side effects.
Sell cheaper than the government-set price? You take a loss. It is not recognized as the standard market price for acquisition tax, capital gains tax, gift tax, and the rest. Even someone who was ready to sell takes one look at the tax bill and their resolve evaporates. It is no exaggeration to say the tax code has locked down selling.
Laws that shrink the inventory hitting the real estate market. Even one of these is enough to distort prices.
"They revised capital gains tax as well. Heavy surtaxes on multi-home owners."
"Ah… that was last year, right? But that was supposed to be a law for reining in home prices."
"No, it wasn't."
"What?!"
The capital gains surtax is a problem too. It can look like a reasonable legal revision at first glance.
Have to pay more tax? Then I'm not selling! Inventory on the market shrinks again.
If that had been the only measure, it might have counted as a genuine tax on the rich. It might even have worked as originally intended. The problem is that similar laws are not limited to one or two.
"On top of that, the Seoul city government…"
"There's more?"
"They drastically tightened the Reconstruction Safety Assessment criteria. That means new inventory in Seoul has no choice but to dry up."
The mayor of Seoul does not like reconstruction. Permits were already hard to get; now they are effectively impossible.
Which means supply never gets released.
The law of supply and demand. Restrict supply, and the value of already-built real estate rises.
The economy's trash right now and overseas real estate is completely wrecked—how is it supposed to rise?
"Not my problem."
Plenty of bad news exists. The economy is weak, and the OECD housing price index has locked into a steep decline.
In the stock market that would matter.
The whole world is falling! Korea has to fall too! That would be the natural order of things.
Real estate does not work that way. Everything that happens stays inside this tiny scrap of land.
"I heard the toxic unsold inventory problem is extremely severe—isn't that true?"
"Those are bad locations."
"Locations?"
"The good areas are locked down by reconstruction regulations."
A single nation's policy can control it. Global trends get casually ignored.
"So I caught on. This is a situation where real estate prices have no choice but to rise."
"Ah…"
"Under this administration, if you don't buy real estate you can become an overnight pauper."
"W-wait a second!"
These policies. The well-intentioned politicians almost certainly did not draft them with that outcome in mind.
But being stupid is still a crime.
The effect is to lock real estate inventory in place. And the measures stacked on top of each other by a factor of three. Close the barn door after the cow is already gone—and then refuse to fix the barn either. Every force in the universe is pointing toward rising real estate.
The President swore he'd crush home prices though -_-
"If your company's CEO says he'll implement stock price support measures, do you believe him? You watch what he actually does."
We'll raise our company's stock price! Meanwhile they skip shareholder returns and throw performance-bonus parties instead.
Of course it doesn't go up.
Real estate is the same. You ignore the lip service and look at the actual content of the policies being implemented. They may want to rein in home prices. But that will is nowhere near as strong as the words they speak. Any investor checks this as a baseline. I simply judged the character of the current administration.
Minor side effects were inevitable.
Sonik-jwa's broadcast appearance.
— Real estate isn't doomed after all?
— Look at the JuGal bros wrecking the broadcast lmaoooo
— Sonik-jwa statement analysis.txt
— Sonik-jwa says he sees real estate rising
Of course the stock communities went berserk. Not only had he shown his face for the first time in ages—
But not because the economy is improving—because the government is running real estate boost policies
Construction stocks are NOT beneficiaries so anyone thinking of buying, take note
—he had dropped a massive bomb of a statement. He had reversed the market's direction a full 180 degrees. The reasoning was open to debate. But it was accepted as having a point.
2. Capital gains surtax on multi-home owners
3. Tightened Reconstruction Safety Assessment criteria
These three laws lock real estate inventory in place
Roughly the same logic as illicit stock manipulators playing games with a newly listed stock under lock-up
A similar situation. Stock markets are full of them. From a stock investor's perspective it was easy to understand.
— Sonik-jwa << Let's get him expelled from the industry!
— How about we start a campaign here on DentureAng?
— The President works day and night to rein in real estate
— This Sonik-jwa guy's ideology is red…
But not everyone saw it that way. In certain communities, chaos erupted for an entirely different reason.
I nearly had a heart attack watching the economics channel just now
How can anyone claim the President is deliberately driving real estate higher?
Political interpretation. They moved not by logical reason, but by the direction of ideology. He had touched a nerve. It was, in truth, an inevitably sensitive topic.
Some slippery eel of a guy just dumped cold water on it
Asset markets have been rising on bubble for the past two years, but
the policies are finally starting to take effect and bring things under control…
Real estate. It has one major difference from stocks. It is a sensitive issue even for ordinary citizens. Fail to rein in real estate prices? It is perceived as the government's fault. And there are people who are extremely sensitive about that.
Don't Buy Real Estate Campaign!
Those who already own real estate, sell if you can!
Let's flatten the nose of that cultist spouting nonsense about home prices rising
The vested interests with money and power. When discontent with the current system grows, their own privileges collapse. Sonik-jwa's words must not become reality. This was a group with the power to make sure of that.
[Real Estate Sale Proceeds Confirmation Certificate.jpg]
Sold it clean! The young lady who signed the contract was quite pretty…
Hope we meet again under better circumstances haha
They steer society the way they want. They dreamed that this time would be no different—but they were living in a fantasy.