A national research institute diagnosed that the real housing cost has risen sharply since 2020. This was attributed to a significant decrease in the number of new home occupants.
Seoul apartment seen from Namsan last. yunhap news
On the 28th, the Korea Development Institute (KDI) published a report titled ‘Changes in rental housing cost and housing supply’. KDI calculated the integrated housing cost index, which converted the entire rental contract, which is made in various ways, such as jeonse, reverse jeonse, and monthly rent, into monthly rent. Only apartments, which account for 62.9% of all housing units (as of 2020), were analyzed. As a result of calculating the index after 2011, when information on real rental contract transactions began to accumulate, the housing cost index, which had fallen stably from 2012 to 2019, soared from 2020.
The national real integrated housing cost index declined by an average of 3.3% from 2012 to 2019, but rose 3.9% in 2020 and 7.3% last year. Oh Ji-yoon, head of KDI Real Estate Research Team, who conducted this study, said, “The recent rise in integrated housing cost after a long period of decline is closely related to supply changes. “The real housing cost fell, but then the housing cost level, which had been lowered, rose as the number of occupants decreased.”
In this report, KDI also pointed out the problem that housing cost and the price of jeonse and monthly rent were not properly reflected in the consumer price index. The consumer price index announced by the National Statistical Office is calculated by averaging the changes in cheonsei and monthly rent. Because Jeonse deposits are viewed as consumption rather than opportunity cost (return generated when the same money is invested elsewhere), a ‘statistical illusion’ according to interest rates may appear. Generally, when interest rates are low, it is easier to obtain a Jeonse loan, so Jeonse tends to rise. Conversely, when interest rates rise, Jeonse tends to go down.
A real estate agency in downtown Seoul on the 21st. yunhap news
As market interest rates are rising recently, there is a high possibility that the housing cost will be lower than the actual price according to the consumer price statistics. In this regard, team leader Oh said, “Considering the share of housing rental in the consumer price index, it is necessary to consider accordingly so that the opportunity cost can be appropriately reflected according to the type of rental contract.”
The KDI evaluated that the housing supply shortage, which caused housing costs to rise, is likely to intensify due to the rise in raw material prices. “There is a possibility that housing supply may be delayed due to the recent increase in construction-related costs,” said team leader Oh. “In the long term, it is necessary to avoid artificial supply regulations so that housing can be supplied autonomously according to changes in demand, and to gradually ease regulations related to maintenance projects so that new supply can be made smoothly in downtown areas where public-led supply is difficult. ” he suggested.
Sejong = Correspondent Jo Hyun-sook newear@joongang.co.kr
