"I'm making this judgment as to whether the real estate market is stabilizing."
This is what the Minister of Land, Infrastructure and Transport Kim Hyun-mi said on a radio broadcast last week.
At least according to the statistics of the Korea Appraisal Board (Seoul apartment prices increased by 0.01% for 4 consecutive weeks), it seems that the state has entered a stable trend, as Minister Kim said.
That's fortunate.
The buying trend is also fading.
Last week, the Seoul apartment purchase advantage index recorded '96.2', down 5.3p from the previous week's 101.5.
It fell below the baseline 100 in 13 weeks.
It means that there are more people who want to sell than people who want to buy a house.
It seems that the government's policy to curb demand, such as strong lending regulations and tightening tax burdens, is partially taking effect.
However, overall, it can be said that such a demand suppression policy had a greater reaction than an action.
The ballooning effect of demand rushing around the regulated area, the so-called'keying' that raises the price of the house to the limit of lending, and the phenomenon of'panic buying', which is a concern about rising house prices in recent years.
The demand suppression policy has shown a wide variety of predictable'government failure' cases in the real estate market.
● As
such side effects resulted from
supply expansion beyond demand suppression, the
government also proposed a new policy direction.
On the 4th of last month, it came up with a plan to expand housing supply.
It was intended not only to curb demand, but also to expand supply, another axis that sets prices in the market.
And the core of the supply expansion policy was the'third new city'.
A new city is not literally a city that has grown naturally, but a large-scale residential complex by design.
In Korea, the first new city was built in 1989 and the second new city was established in 2003, and this time, a third new city was built to provide housing.
Specifically, there are 300,000 households in the metropolitan area such as Namyangju, Hanam, Incheon, Goyang, Bucheon, Gwacheon, and Ansan.
The intention is to provide housing in a large complex relatively close to Seoul, and in particular, to alleviate the soaring demand for housing for 30 and 40 households.
Can the 3rd new town calm down the'panic buying' phenomenon of young people?
● I
was uneasy
about the
start of a
new status and increased interest
.
When the location of the third new town was first announced, the market reaction was cold.
This was due to concerns that there is a limit to the distribution of demand as it is far from downtown Seoul, especially Gangnam, where residential demand is concentrated.
The Gwacheon district, close to Gangnam, received positive reviews.
If the transportation network was not properly established, it seemed that there was a high possibility that it would fall into a bed town to sleep only after work without self-sufficiency.
Just like the first and second new towns did.
However, the atmosphere has changed recently.
The interest in the 3rd new town has grown rapidly, especially among young people.
More than 1 million people (as of September 17) visited the website of the 3rd new town in about a month.
There are 180,000 applicants for notification service that receive the subscription schedule via text message.
Analysis of the subscription notification applicants revealed
that 78% of those in their 40s or younger (10% in their 20s, 38% in their 30s, and 30% in their 40s).
That is why young people's expectations for the 3rd new city have grown.
In particular, 95% of them chose their purpose of residence, and it was found that 3040 households considered the 3rd new town as an opportunity to'prepare my home'.
Instead of Seoul, which is too high, it is turning to the third new city where transportation networks and living conditions will be provided.
It is also encouraging that 33% of the applicants are residents of Seoul.
This is because the dispersion of housing demand in Seoul can also be expected.
The Ministry of Land, Infrastructure and Transport did not hide expectations.
“In the third new town, both private and public pre-sale are inexpensive because the pre-sale price limit is applied. The subscription method also varies from a bonus system to an additional point system that gives points according to the newlyweds, special supply for the first time in life, and subscription savings subscription period. Therefore, homeless people by age group will be able to benefit.”
● The key to success or failure is
whether the'transportation
' 3rd new city will meet these high expectations, in conclusion, depends on the'transportation infrastructure'.
In fact,'convenient transportation' surpassed the house price and ranked first in the 3rd new city preference reason.
The distance from work also ranked third, and it was analyzed that how quickly and conveniently you can travel between home and work is an important factor.
In this context, the Gangnam area of Seoul, the Gyosan area of Hanam, and the Gwacheon area of Gwacheon with good accessibility received a lot of interest.
Hanyang University professor Lee Chang-moo (Urban Real Estate Economics Laboratory) said, "The plan to supply (housing) directly to the city center will be the most effective, but if you have a well-equipped transportation network to complement accessibility, the 3rd new city can be a good alternative. Considering that, the possibility of success seems greater than in the first and second new cities.”
The government is also taking this into account and is actively working on building a transportation network.
Hanam and Gwacheon, where measures to improve regional traffic were confirmed in May, entered the detailed design of the road project, and Namyangju, Goyang, Incheon, and Bucheon plan to finalize traffic measures within this year.
In addition, follow-up procedures such as a preliminary feasibility study are being rapidly promoted so that the transportation network can be completed in a timely manner.
It is reported that the project operator will bear the cost of operating the metropolitan bus until the completion of the subway at the beginning of the move-in.
● "It should be done"
Nevertheless, there are many opinions that the rosy expectations for the 3rd new town are dangerous.
“With no land compensation yet, it takes at least 5-6 years for the first move-in, no matter how quickly you move in. In the meantime, you have to go back to the charter two more times. It is doubtful that the price of the house will go down. I can't even dream of getting a house, so it might be right to live now."
"The original plan is so well prepared. But only the plan is well prepared. Have the traffic measures been actually properly done? I don't think I have seen a case of opening in accordance with the opening date. It should be done."
There are a number of negative reactions, such as, "If you move in after 7 to 8 years, you are already in your 40s to 50s. My children are big enough, but I'm afraid that I'm afraid that they will be swaying in a place with poor educational infrastructure like the 1st and 2nd new cities."
It is also a homework to be resolved against local residents.
Even if the opposition in Seoul such as Taereung is excluded, the city of Gwacheon is in a state where the mayor directly requested the government to exclude it from the pre-subscription target.
It also delivered signatures of 20,000 citizens requesting the withdrawal of the housing supply plan to the Ministry of Land, Infrastructure and Transport.
"After the government building was relocated, the self-sufficiency function had already declined. Why should we use it as a means to get the house price in Seoul?"
So it is real from now on.
The government needs to show its ability.
The key is whether we can alleviate distrust and concerns with prompt execution and sincere persuasion.
In particular, as transportation network construction is a long-term project, it is necessary to carefully approach how to invest human and material resources, including budget.
Sim Gyo-eon, a professor at Konkuk University's Department of Real Estate, also worried, "In order for market uncertainty to be resolved, the actual supply must be made much steeper than the market expected. It is doubtful whether the current government has the capability to do so."
● Why Confidence is Uncomfortable
Professor Tetlock, a famous American psychologist (University of Pennsylvania Graduate School of Business) conducted an interesting experiment.
From 1987 to 2003, we asked 284 experts a number of questions about future politics, economy, international affairs, and society, and analyzed how much they actually made it in the future.
What was the result?
It wasn't better than ordinary people and even chimpanzees throwing darts (1)
But what's even more interesting about this experiment is that of the experts,
the famous experts who appear on TV often have the lowest predictive power.
They had a loud voice, but their ears were blocked, and they had only a firm conviction.
On the contrary, the well-matched experts were those with open ears.
Experts who are less confident and embrace uncertainty have better predictive power.
(Tetlock wrote a book entitled'Expert's Political Judgment' and became a world-class bestseller) (2)
Deputy Prime Minister Hong Nam-ki said that as market expectations stabilized, price stability would further solidify, Panic buying in the 3rd new town Hyeon-mi Kim and Chang-Hum Byun, President of Korea Land and Housing Corporation (LH), remarked that it will contribute to the stabilization of real estate downside and lead to a decline in housing prices in Seoul.
What advice would Professor Turtlerock give them if they had heard this'confident remark'?
We will leave the judgment to you.
1.Everybody'S an Expert, https://www.newyorker.com/magazine/2005/12/05/everybodys-an-expert
2.Tetlock, PE (2006-08-20).
Expert political judgment: How good is it?
How can we know?.
Princeton University Press.
ISBN 978-0-691-12871-9.