Hopeless housing market has young S. Koreans turning increasingly to crypto, stocks

Posted on : 2021-12-12 09:57 KST Modified on : 2021-12-12 09:57 KST
A sense of desperation pervades the younger generation, who no longer feel that going to college and getting a job is enough to provide a secure future
A haze blankets the view of Seoul apartments as seen from Namsan Mountain on Dec. 2. (Yonhap News)
A haze blankets the view of Seoul apartments as seen from Namsan Mountain on Dec. 2. (Yonhap News)

“We’re in my early thirties and have two kids, but we don’t own a house, you see. Neither my parents nor my in-laws own houses, either. For people like us, the 10% down payment would be out of reach even if we did win a lottery for the right to buy a new apartment. We don’t even enter those lotteries because we don’t feel confident that we could pay off the balance. This is the situation we face when we read news articles about someone owning 600 houses or someone getting a house before the age of 10. That’s when life begins to feel so bleak.”

These vivid reflections on the intractable issue of housing inequality were offered by a 34-year-old office worker in Gangwon Province. The couple started out married life paying 550,000 won a month in rent at a low-rise apartment in Seoul. After having twins, they moved back to their hometown.

The husband takes the KTX express train to Seoul for work. “Sometimes I think we could buy a house if we saved up all the money I spend on train tickets, but I figure Seoul housing prices would rise so much that we couldn’t even buy a studio apartment in a basement by then. Our jeonse key money is going to go up here too in two years, and it’s depressing to think about having to pack up the kids and move somewhere else,” he said with a sigh.

Key money, known commonly as jeonse, is a rental system in which tenants pay a large deposit upfront in lieu of monthly rent.

The Hankyoreh and the polling agency Human and Data from Nov. 23-25 conducted a focus group interview with 28 adults in their early 20s and early 30s, split into four groups. The findings showed a sense of desperation over the real estate market on the part of the public.

The respondents said that even if they studied hard, graduated from college and got jobs like adults told them to, sky-high home prices were a barrier too high to overcome. The 28 informants are identified here by age and gender, as in “E2W1” (early 20s, woman 1) or “L2M2” (late 20s, man 2).

Crypto, stock boom rooted in public anxiety over real estate

A professional in Seoul (L2M5) said, “I finished college and got a job. Many of my friends bought cars. But when it comes to homes, we’re all stuck.”

“An entry-level job after college offers a starting salary range of 35 million to 40 million won. If you save 10 million won a year, you need to work 30 years to earn 300 million won. So without Bitcoin or stocks, buying a home is out of the question.”

A man in his late 20s (L2M1) told us, “I grew up believing in the life cycle of securing a job after college, getting married, having children, buying a home and car, and preparing for retirement. I thought a normal life for me was possible through hard work.”

“My next step is buying a car and home, but it’s like, ‘That’s a pipe dream!’” he added. “I feel a sense of shame over whether I screwed up my life.”

People in their early 20s are also worried about housing, saying they’re anxious about housing prospects before having even found a job. A college student in Seoul (E2W1) said, “Adults around me tell me that real estate isn’t a problem for me to worry about now, but I personally think it’s much closer than that.”

“For me to live my own life, I have to land a job while simultaneously becoming financially independent from my parents. The starting line for that is housing. But the starting salary for people just entering the workforce isn’t enough to live on; both I and my friends feel really frustrated by it.”

To many attending university, monthly rent is a pressing issue. Another student (E2W2) said, “The saying that generations in the future will be born with 100 million won in debt rings so true.”

A college student in Seoul (E2W7) said, “Everyone around me pays monthly rent for housing, and it’s a huge burden. Even if you try to save for jeonse key money with a secure loan, there are so many areas that are dangerous for a woman to live alone. It makes no sense that rent averages 500,000 to a million won every month.”

A 20-something man (E2M4) living alone in Seoul added, “I feel sorry for my parents because of how high my monthly rent is.”

The study also found that the surge in real estate prices was deemed far beyond just difficulty in buying a home. Scraping together wages to put into savings every month has been offset by the exponential rise in real estate prices, leading to explosive interest of the younger generation in Bitcoin and stocks to buy homes as expressed in the neologism “yeongkkeul” — to put everything one has, down to your very soul, on the line to invest.

On “yeongkkeul” and “bittu” (going into debt to invest), a 20-something woman (L2W3) preparing to change jobs, said, “Earnings have a structure that cannot beat capital gains, so without [doing something unreasonable, even] there’s no possible way to buy a house.”

A man (E2M6) residing in Seoul said, “The older generation told us to get a house for the family to gather in, but now tells us not to,” adding, “The reason my friends buy stocks or crypto is because of the huge barrier to achieving one’s desired socioeconomic status.”

Another woman (E2W7) added, “The reality is that one can’t buy real estate by saving in your 20s, so everyone around me seems to have given up. So this has fueled a growing appetite for unearned income and investment in crypto or stocks.”

Such fears over housing insecurity have naturally fueled criticism of the Moon administration. One man (E3M3) said, “I moved last week, but my opinion of [the incumbent administration] took a dive while looking for a house. I have nowhere to go because housing is too expensive. It leaves me wondering what the hell it is that this administration has accomplished.”

Though housing is an urgent topic for the young generation, this demographic has shown little interest in the pledge by the two leading hopefuls in next year’s presidential election of supplying 2.5 million housing units if elected. Lee Jae-myung of the ruling Democratic Party has pledged one million of the 2.5 million units as “basic housing” for long-term rental, while Lee Seok-youl of the main opposition People Power Party has promised 300,000 units of “youth housing at cost” that can be resold to the government after five years for a return of up to 70%.

A man in his early 20s (E2M2) said, “I’m interested in the promise of resolving the youth housing problem, but publicly provided youth or rental housing cannot be resold or used as assets. This is an equity problem with the older generation.”

“The older generation used housing for investment and has made a lot of profit from it, but because this problem is serious, it’s unfair to tell people in their 20s and 30s, ‘Don’t engage in speculation because a home is for purchase, not speculation.’”

An instructor at a private tutoring academy (E2W4) called government-supplied housing “unsatisfactory.” “The government said, ‘There’s a housing shortage? We’ll give you housing, so live here!’ but public housing looks like a chicken coop. People with no money have to live in low-quality housing; isn’t that just another form of class division?’’

By Song Chae Kyung-hwa, staff reporter

Please direct questions or comments to [english@hani.co.kr]

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