Profits from stocks fund housing purchases in ritziest areas as prediction by Lee's policy chief is realized
Cash-rich buyers in their 40s and 50s are selling financial assets to purchase pricier homes in Gangnam District, southern Seoul, and other high-end neighborhoods despite tighter mortgage rules.
Seoul's apartment complexes are seen from the Lotte Tower in Songpa District, southern Seoul on May 27.NEWS1
Cash is doing what credit no longer can. Buyers in their 40s and 50s are riding the skyrocketing stock market into Gangnam and Seoul's costliest districts a year after tougher mortgage rules shut the door on them.
The real estate trend was foretold by Kim Yong-beom, the presidential director of national policy.
"If the national wealth our semiconductor companies have earned is converted into unearned real estate gains, and the fruits of growth go only to a few, this boom will not last long," he wrote on Facebook on Saturday.
He cautioned that ordinary lending curbs may not be enough this time, adding, "It is likely to be people with cash, not people taking on debt, who make a move."
The pattern appears in data on financial disclosures homebuyers must file that was obtained by People Power Party Rep. Kim Jong-yang from the Ministry of Land, Infrastructure and Transport on Monday.
From January to April, profit from selling stocks, bonds and cryptocurrency made up the largest share of funds among buyers in their 50s, at 6.7 percent, followed by those in their 40s at 5.5 percent and their 30s at 5 percent. The proportion of funds acquired by selling other property ran higher still: 42.8 percent for buyers in their 50s and 37.4 percent for those in their 40s, well above the 5.2 percent for buyers in their 20s and 17.8 percent for those in their 30s.
One office worker in their late 40s who lives in an apartment in Mapo District, western Seoul, is among them. The plan was to sell up and move to a better school district before their child started elementary school, until last year's tighter lending rules forced a delay.
"At the time, my loan limit fell short and moving was hard, but my stock gains have grown lately and I can now make up the difference," the worker said. "I'm looking to sell my current place, add the investment proceeds and buy in a pricier area."
Apartments are seen from Lotte Tower in Songpa District, southern Seoul.NEWS1
Buyers in their 40s and 50s already hold considerably more assets than younger generations, so they have more room to channel gains from rising stock prices into property rather than spending.
It is also concentrated in particular districts. From January to April, the share of funds coming from selling stocks, bonds and cryptocurrency was highest in Seocho District in southern Seoul, at 13.4 percent. Yongsan District in central Seoul followed at 13.1 percent, then Gangnam District at 13 percent, Songpa District at 9.9 percent, Yeongdeungpo District in western Seoul at 8.5 percent and Seongdong District in eastern Seoul at 8.4 percent. In Gangnam, Seocho, Songpa and Yongsan, financial asset sales covered more than 10 percent of the purchase price.
The higher the price, the stronger the effect. Profit from the sales of financial assets accounted for just 2.2 percent of funding for homes under 300 million won ($195,000), but the share climbed past 6 percent for homes of 1.2 billion won or more and reached 13.5 percent for those of 1.5 billion won and up. In other words, money raised by cashing out financial assets is flowing disproportionately into the priciest homes.
By property type, apartments drew the highest share at 7.1 percent, ahead of detached and multifamily houses at 5.9 percent, townhouses at 5.8 percent and condos at 3.8 percent.
The shift is already visible in prices. Figures from the Korea Real Estate Board show Gangnam District apartment values, which had been falling or flat, turned higher in the second week of May for the first time in 12 weeks.
Analysts say Gangnam-area demand, which had cooled under the lending restrictions imposed on June 27 of last year, has revived in step with the stock-market boom.
"The Gangnam area is favored by buyers with the financial means," Kim Hyo-seon, a senior real estate specialist at KB Kookmin Bank, said. "We're seeing more buyers who have cashed in investment gains stepping in, even at high asking prices."
This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
