Originally, I was going to buy a larger unit in the same complex, but I plan to move in with a jeonse lease and invest the remaining money in stocks. Stock returns seem likely to be higher than home price gains.
These were the words of a 30-something office worker I met just a few weeks ago at a licensed real estate agency in Seongbuk District, Seoul. It was when the KOSPI, after achieving the "KOSPI 5000" pledge by President Lee Jae-myung earlier this year, was racing toward 6000. The KOSPI index, which had been rising without end, eventually surpassed 6000, and a "money move" was starting in the market, with people liquidating real estate and shifting funds into the stock market.
The money move phenomenon of cashing out real estate and moving funds into the stock market is centered on the young. They think home prices have risen too much to comfortably buy, and if they sit still, they will fall behind others in the stock market and become "lightning paupers" again. A representative indicator of this trend is the subscription savings account. With low odds of winning, soaring pre-sale prices, and a stock market frenzy, arguments that subscription accounts are useless are getting stronger by the day.
According to the status of subscribers to housing subscription accounts (comprehensive housing subscription savings, subscription deposit, subscription installment savings, and subscription savings) compiled by the Korea Real Estate Board (REB), as of the end of January this year there were 24,937,771 subscribers to comprehensive housing subscription savings. The number of subscribers being under 25 million is the first time in 6 years and 7 months since June 2019 (24,979,730). In addition, the average subscription score for apartments pre-sold in Seoul last year was 65.81 points, the record high since related statistics were released in 2020. In effect, for the young generation, winning a Seoul apartment subscription is like "picking stars from the sky."
While access to real estate has become difficult due to prolonged high interest rates and lending regulations, the stock market is running hot. Investor deposits, idle funds for stock investment, are renewing record highs day after day. According to the Korea Financial Investment Association, investor deposits on the 3rd were 129.8187 trillion won, more than 11 trillion won higher than 118.7487 trillion won on the 27th of last month. That is a 9.3% increase in a single trading day. Balances in Cash Management Accounts (CMA) at securities firms, considered another pool of standby funds for the stock market, and margin loan balances known as "bit-too" are likewise repeatedly hitting record highs.
On online communities, posts are appearing one by one saying that money intended for acquiring dwellings has been put into stock investments. Notably, on the 24th of last month, on the Blind stocks and investment channel, an anonymous community for office workers, a post titled "Agreed with my girlfriend and split our saved wedding funds half-and-half into Samjeon and Hanik today" drew attention. A person identified as A, who said the person is a civil servant, said, "My girlfriend and I agreed to invest our saved wedding funds of 300 million won half each in Samsung Electronics and SK hynix."
A said, "We both believe this 300 million won will become 1 billion won in a year," and added, "We thought a lot about moving straight into a home in Seoul, but judged this is the beginning of a bull market and an opportunity in the 'gukjang' new-normal era." The person explained buying Samsung Electronics at 199,700 won per share and SK hynix at 1,002,000 won, 150 million won worth each.
But starting in March, the situation began to change rapidly. That is because in just two days, the 3rd and 4th, the KOSPI index plunged more than 20%, over 1,000 points. About a week after A posted, comments kept coming in asking after the person and worrying about the downturn, such as "Are you still alive?" and "My average price is higher than yours and only tears are flowing." As of the 6th, Samsung Electronics closed at 188,200 won and SK hynix at 924,000 won.
Among investors, voices expressing anxiety over the repeated surges and plunges are growing louder. After plunging for two straight days, the KOSPI index rebounded sharply on the 5th to recover the 5,580 level. Then on the 6th, it opened lower, briefly turned higher, but was pushed down to 5,381.27. Amid this "up-and-down" market, Michael Burry, the American short seller famous as the real-life figure behind the movie "The Big Short," warned that it was "due to institutional investors' short-term trading," calling it a "sign of (stock investing) doom."
On real estate online communities, posts are appearing that mock people who sold real estate and invested in stocks. A post saying, "An acquaintance sold a 2 billion won home in Gangdong District, moved into a 1 billion won jeonse home, and put the remaining 1 billion won into stocks a while ago, and the return is already minus (-) 30%," drew dozens of comments along the lines of "How absurd it was to say sell your home and buy stocks," and became a popular post.
Park Hap-soo, an adjunct professor at Konkuk University Graduate School of Real Estate, said, "The government is trying to guide real estate funds into the stock market, but for those without a home, if you have realized stock gains, the natural order is to use them to buy a home," adding, "Even for those who already own a home, there is a strong tendency to shift funds into real estate or financial assets, which are relatively more stable than stocks."