[Real Estate Market Outlook] After the 10.15 Real Estate Measures (Part 2) - Market Impact, Structural Changes, and Our Strategy

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[10.15 Real Estate Measure Part 2]

       

In Part 1, we conducted an in-depth analysis of the 'triple regulation' and 'financial control', the core of the 10.15 measures and a powerful 'shock therapy'. It was the strongest card the government played to quell the market's overheated speculative sentiment.

       

In this Part 2, we will take a detailed look at the immediate impact this powerful policy had on the market, the structural changes we will face, and what wise response strategies are according to each person's position.

   

   

[Real Estate Market Outlook] After the 10.15 Measures (Part 2) - Market Impact, Structural Changes, and Our Strategy

   

1. Short-Term Market Impact: An Immediate 'Transaction Ice Age'

   

The effect of the 10.15 measures was immediate. Immediately after the policy announcement, the metropolitan real estate market literally entered a 'transaction ice age'.

   

With gap investments and corporate investments fundamentally blocked by the 'triple regulation', and even actual demand's funding sources blocked by 'financial control', buyer sentiment cooled rapidly. Sellers tried to maintain their asking prices, but transactions did not occur in a market where buyers had disappeared.

   

The steep rise in apartment prices came to a halt for now. Market participants shifted to a 'wait-and-see' attitude, and the government's short-term policy goal of 'blocking speculative sentiment' appears to have been successfully achieved.

          

                  

         

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2. Long-Term Structural Changes: Side Effects of the Powerful 'Painkiller'

   

However, this powerful 'shock therapy' merely served as a 'painkiller' to suppress speculative demand and failed to solve the market's fundamental problems. Rather, there are concerns about long-term market structural changes due to the policy's side effects.

   

1) Preference for 'One Smart Home' and Deepening Market Polarization

   

Ironically, the government's all-out regulation is likely to further deepen market polarization. By making the LTV 0 for high-priced homes, only wealthy individuals with cash mobilization power are left as the sole participants in core markets like 'Gangnam'.

   

In a situation where loan leverage has become impossible, demand is concentrated only on definite 'one smart home' assets in core locations, not in ambiguous areas. This will ultimately lead to a widening price gap even within Seoul based on location.

   

2) The 'Supply Cliff' Becomes a Reality

   

The biggest limitation of the 10.15 measures is that they focused only on suppressing demand and completely ignored the 'supply' issue.

   

With the entire Seoul area now designated as a 'Land Transaction Permit Zone', pursuing maintenance projects like redevelopment and reconstruction has become virtually impossible. While this may have the short-term effect of stabilizing prices, it is tantamount to having reserved a 'supply cliff' that will drastically reduce the supply of new housing in downtown Seoul in 3-5 years.

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Demand returns eventually, but supply takes a long time to recover. This is why there is criticism that these measures could become a boomerang causing a future surge in housing prices.

   

3) Jeonse/Monthly Rent Market Instability and Acceleration of 'Shift to Monthly Rent'

   

With the sales market blocked, actual-demand buyers who intended to purchase homes are forced to turn to the jeonse/monthly rent market. This can increase demand for jeonse and stimulate a rise in jeonse prices.

   

However, at the same time, the government included even jeonse loans in the DSR regulation, controlling tenants' funding sources as well. Buyers, finding both purchasing and jeonse difficult, are inevitably pushed towards 'half-jeonse' (banjeonse) or 'monthly rent' (wolse), lowering their deposit and paying monthly rent. This will ultimately act to increase the burden of housing costs.

   

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3. Overall Assessment and Our Strategy

   

The 10.15 measures are clearly a 'powerful painkiller' that quelled overheated speculative demand. However, they did not become a 'fundamental cure' to treat the market's underlying disease of 'supply shortage'.

   

The market has entered the beginning of a long-term structural change due to strong regulations. In this 'new normal' market environment, a cool-headed strategy tailored to one's own situation is necessary.

   

       
• Non-Homeowner (Actual Demand)
          The market is in a 'transaction cliff' state. There is no reason to rush into a chase-buy. Rather, as the attractiveness of the existing housing market has decreased due to strong regulations, aiming for the '3rd New Town subscription' or the 'pre-sale' market in proven locations, where long-term stable supply is expected, is a wise strategy.
       
• 1-Homeowner (Upgrade Demand)
          This is a market where 'upgrading' has become virtually the most difficult. This is because additional loans are almost impossible due to LTV and DSR regulations. Rather than making an unreasonable move, it is a priority to re-examine the locational value of the currently owned home and establish a long-term holding strategy.
       
• Multi-Homeowner
          This is the main target of government regulations. They will face the greatest pressure due to increased property tax burdens and loan regulations. A strategic choice to reorganize assets into 'one smart home' is necessary. Although transactions will be difficult as the market is frozen, it is a time to seriously consider 'asset restructuring', sequentially disposing of non-core assets in less desirable locations.
   

   

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4. Conclusion: A Time for Cool-Headed Analysis

   

The 10.15 measures temporarily halted the market's dynamism with the government's strong will. While it succeeded in short-term market stabilization, it left behind the long-term challenges of 'deepening polarization' and a 'supply cliff'.

   

In times like this, when government policy strongly controls the market, emotional judgments or 'panic buying' are the actions to be most avoided. What is needed is the wisdom to take a step back, cool-headedly analyze the policy's intent and the market's structural changes, and establish a long-term strategy that fits one's own situation.

      

▶ Go to 10.15 Real Estate Measure Part 1 Post

   

       

The contents of this blog are for reference purposes only for investment decisions, and investment decisions must be made based on individual judgment and responsibility. In no case can the information on this blog be used as evidentiary material for legal responsibility regarding investment results.