Implications: South Korea’s domestic challenges shape its attitudes towards foreign partners. Media discussions on Chinese investment in property correspond with soaring housing prices in South Korea. In the early 2010s, the Chinese acquisition of property on Jeju Island led to a shortage of affordable homes and tensions with locals. But this did not lead to national policy response because people elsewhere in the country did not share similar concerns. While recent concerns accompany the growing acquisition of property on the Korean mainland by Chinese nationals, discussions are also taking place at a time when there is heightened political debate around housing insecurity.
Context: Housing prices increased by 47% since 2017 in South Korea. Efforts by the government to regulate this real estate bubble with constraints on mortgage lending and taxes failed to stabilize the market. Low-interest rates aimed to ameliorate the impact of the pandemic may have also contributed to the growth of housing prices by making it easier for people to borrow money more cheaply. The government has sought to apply different solutions in 2021, including adding new housing to the market. However, challenges with buying a home will likely play a role in the 2022 presidential election.
This briefing comes from Korea View, a weekly newsletter published by the Korea Economic Institute. Korea View aims to cover developments that reveal trends on the Korean Peninsula but receive little attention in the United States. If you would like to sign up, please find the online form here.
Korea View was edited by Yong Kwon with the help of Janet Hong, Yubin Huh, and Mai Anna Pressley. Picture from the flickr account of Nicolas Nova