Beyond Gangnam: Research Reveals Seoul Isn’t the Sole Driver of Korean Housing Prices

1 min read
August 11, 2023

Han Ik Jang’s recent study, “The Analysis of Regional Leading and Lagging Relations on the House Price Change in S. Korea” attempts to redefine how we perceive the South Korean real estate landscape.

Turbulent Times: South Korea’s housing waters have been tempestuous. While some forecast a prolonged slump, others envision a rebound. President Yoon’s countermeasure? You guess it, easing certain real estate regulations. But most of these are centred in Seoul, leading sceptics to question their broader impact or even if there is any impact at all.

The Context:

  • Why it Matters: Remember that massive surge since October 2019? The U.S. rate hike in March 2022 threw a wrench into it, causing potential real estate defaults and fluctuating prices. All eyes are on Seoul.
  • Seoul’s Gravity: It’s been known in political circles: Seoul, especially the opulent Gangnam district, has often dictated national housing trends. But Jang suggests the need to probe the sequential link between Seoul’s pricing and the rest of the country because things don’t seem to add up.

Deeper Analysis Reveals:

  • A Holistic View: Jang’s methodology digs deeper than standard metrics, questioning the uniformity of Seoul’s influence on broader domestic trends.
  • Metrics Mismatch: Lee Geun-Young’s 2021 findings added another layer. Institutions like KB Financial Group and KEB Hana Bank employ differing yardsticks, leading to diverse, sometimes conflicting, outcomes.

Jang’s Key Findings:

  1. From Seoul and Beyond: Housing price trends, per Jang, start in Seoul and ripple outward. It’s a cascading effect, with Seoul setting the stage. Yet, other elements also play significant roles in dictating prices.
  2. The Global Connection: Jang’s work reveals how international rate alterations impact the domestic housing dance. Korean policymakers need a broader, more global perspective.
  3. Looking Past Seoul’s Shadows: The capital invariably garners attention. Yet, Jang’s research suggests we look to provincial areas, which often get overshadowed but are crucial to the bigger picture.

On The Horizon:

  • 2023’s Prelude: The year flagged off with unsettling price shifts, underscoring the need for more robust market surveillance.
  • Balancing Housing Dynamics: It’s not just about housing prices. Interest rates, housing supply, and developmental milestones also demand synchronized policies.

What they say: Jang’s study clarifies that South Korea’s housing strategy needs breadth and depth. Focusing on major cities won’t cut it; you must keep everything in mind, providential needs and international impacts.

Other Thoughts:  South Korea stands at a housing crossroads. The government’s trumpet call? Stabilizing housing prices from Busan’s shores to Seoul’s skyscrapers. Folks may challenge Yoon’s commitment to affordability, but the economics is clear: without the bedrock of price stability, builders hang back, and young Koreans won’t get a small shot at affordable housing without the dark clouds of a recession or depression.

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