“If you buy an apartment in Gangnam, you get a BMW?”… 4 reasons why you shouldn't buy it yet
“There are signs of a repeat of the situation that occurred right after the 2008 financial crisis, when BMW 7 series were given away to apartment contractees and there was even an apartment ‘one plus one’ event.” -Korea Economic Daily
Recently, a cold wind is blowing in the Gangnam real estate market. As the number of houses that cannot find occupants increases rapidly, there are even concerns that the situation immediately after the global financial crisis, which was called the 'graveyard of unsold properties,' may be repeated.
In Gangnam, about 13,000 households are expected to be supplied this year, which is about four times more than last year's number. It's literally a 'volume bomb', an oversupply.
As the number of move-ins has increased, the average rental price of apartments in Gangnam-gu has recently fallen below 1 billion won. As housing prices continue to fall, questions such as 'Is now an opportunity?', 'Can I buy an apartment in Gangnam, too?' There are many people showing interest.
Is this really your chance?
Q. Will Gangnam house prices collapse in the second half of the year?
A. It is true that there is a lot of housing in Gangnam, and it is true that the atmosphere is still bad. However, I do not agree with the expression ‘it will collapse’.
I think this word is more appropriate. ‘Transaction missing’ and ‘adjustment phase’.
I think it is highly likely that this adjustment range will go down a little further due to the increased number of move-ins, which can clearly put further downward pressure.
Isn’t there an influx of new tenants? This will finally go on sale.
From the Korean War in 1954 to 2022, the statistically confirmed period in which it can be said that 'real estate has really collapsed' is after the IMF foreign exchange crisis and the 2008 global financial crisis.
Looking at what happened in those two sections, I think you can purchase enough of the new stock now at a good timing.
① Relaxation of loan regulations
The stories revealed in the two sections are as follows.
First of all, the government will drastically relax lending regulations, saying, ‘Please buy this house.’ I'm already doing this little by little.
②Significant discount on sale price
And construction companies lower the price, saying, ‘We can’t sell at this price anymore, give us a discount on the sale price.’
Then, I can get a favorable loan and the house price will be cheaper. Since this is the situation, I'm saying that I should buy it soon, but I shouldn't buy it already.
③ Free vehicle provided
I'll give it to you soon.
As the real estate market slowed down in 2008, construction companies gave me BMWs or Mercedes-Benz, saying, ‘If you buy an apartment, I’ll give you a car.’
So, when the topic of cars comes up, you can think, ‘Oh, now is the time to buy one.’
If you are an actual consumer, wanting to live in a good neighborhood and a good house is not a bad thing. Don't keep investing or speculating, but for actual users and those who want to buy, the timing is worth it.
For example, a clearer signal than buying in 2025 or buying if it falls by a few percent is that there is a movement to sell it enormously, such as offering a car if you buy a house in addition to discounting the sale price you just mentioned. I wish I could buy it then. Yes and there is one more thing.
④ Apartment upgrade
If you wait and buy, you will get an apartment with better specifications.
This is also a phenomenon that occurred after the global financial crisis, but not after the IMF foreign exchange crisis. Because at that time, it was very difficult for construction companies, and the overall purchasing power of our country's economy was greatly reduced, so it was not after the IMF foreign exchange crisis.
After the global financial crisis, the construction industry plummeted. Construction companies, who were in a desperate situation where they had to somehow sell these apartments, upgraded the apartments.
The floor presented in the model house was replaced with Italian marble, and originally they said they would wallpaper it with paper wallpaper, but they changed it to marble, and in this way, they raised the apartment specifications.
So, many of the apartments sold around that time were luxury apartments. Apartments with better specifications than the ones available now will be released soon, so let's wait until then.
If they give you a car, go around the model house slowly. If you ask, “Has anything changed in the meantime?” they will often say, “It’s changed a lot. First of all, it’s marble.”
I think it would be good if you could just wait a little longer until then.
“Next year, there will be a huge signal about a real estate low again.”
There will be a National Assembly election next year, so we need to prepare for the election, and for a National Assembly member, it is advantageous to be elected if land prices in their district are preserved in some way.
In this way, there are more accurate signals in the real estate market than saying, “Buy a house when and by what percentage it falls.” Those who have studied real estate trends for a long time have the insight to catch this signal.
If you want to seize clear opportunities in the Korean real estate market, where policies change every day, you need to study signals from now on. Please prepare in advance by knowing how big the decline will be and when the rebound will occur.