📊2) Real Estate Market Issues and Global Real Estate Market Status

The real estate market is a significant economic factor worldwide, but it faces various challenges.

1] Key Issues in the Real Estate Market

- Rising Housing Prices and Accessibility Issues

• Surging Housing Prices:Real estate prices are continuously rising in many countries, especially in major cities and commercial areas. This has made it increasingly difficult for younger generations and low-income groups to purchase or rent housing.

• Causes:Key causes include low-interest rate policies, accelerated urbanization, real estate speculation, and the growing value of real estate as an asset.

• Current State:Real estate prices have escalated sharply since the COVID-19 pandemic in 2020. Some countries have implemented policies to curb these price increases, but housing prices remain high.

- Imbalance in the Real Estate Market

• Supply and Demand Imbalance:In some areas, a housing shortage is causing prices to skyrocket, while in others, excess supply leads to falling property prices, creating significant market imbalance.

• Urban Concentration:Economic activities and populations are concentrated in major cities, leading to a downturn in local real estate markets and overcrowding in urban areas.

• Current State:This imbalance is prevalent in many countries, particularly in major cities of developed nations and large cities in developing countries, where housing shortages are worsening.

- Financial and Lending Issues

• Increasing Reliance on Loans:Many households take on substantial loans to purchase property, leading to a rise in household debt. If interest rates rise, repayment burdens could increase significantly.

• Impact of Rising Interest Rates:Since 2023, major central banks have raised interest rates to curb inflation, increasing loan rates and affecting the real estate market. This could reduce purchasing power and lead to a slowdown in the market.

• Current State:In countries with high household debt, rising interest rates are putting pressure on the real estate market. This is especially notable in countries like South Korea, Canada, and Australia, where household debt and interest rate hikes are significant concerns.

- Real Estate Speculation and Bubbles

• Speculative Investments:Excessive investment by some investors seeking short-term gains can inflate real estate prices beyond their actual value, creating a real estate bubble.

• Impact of Speculation:Speculative real estate transactions cause price instability and make it more difficult for those intending to buy homes for residential purposes.

• Current State:Speculation and bubbles in the real estate market are major issues in places like major Chinese cities, Canada, and South Korea. Some regions are implementing stricter regulations to curb speculation.

- Policy and Regulatory Issues

• Inadequate Regulation:Some countries lack sufficient regulations to stabilize real estate prices or prevent speculation, while excessive regulation can hinder market flexibility and dampen investment sentiment.

• Policy Failures:Policies such as rent caps or increased transaction taxes may unintentionally destabilize the market or fail to produce positive long-term effects.

• Current State:In countries like South Korea, China, and Germany, real estate policies continue to fluctuate between regulation and deregulation, with mixed impacts on the market.

- Environmental and Sustainability Issues

• Carbon Emissions:Real estate development and operations are among the high carbon-emitting industries, necessitating sustainable development and eco-friendly building technologies.

• Current State:Some countries have introduced green building certifications, such as LEED, but most real estate developments still do not adequately consider environmental sustainability.

2] Current State of the Global Real Estate Market

- United States

• Rising Property Prices:The U.S. real estate market experienced significant growth after the 2020 pandemic, with housing prices rising sharply. Low-interest rates and the increase in remote work boosted demand for suburban housing, leading to price surges in specific areas.

• Impact of Interest Rate Increases:Since 2023, as interest rate hikes became more frequent, mortgage rates have risen, reducing purchasing power. Consequently, transaction volumes have decreased, and the upward trend in prices has slowed.

• Commercial Real Estate Crisis:The expansion of remote work and e-commerce after the pandemic has decreased demand for office and commercial real estate, placing additional strain on the commercial real estate market.

- China

• Concerns of a Real Estate Bubble:China’s real estate market experienced rapid growth over recent decades, but concerns about a property bubble have increased. The high debt levels of major real estate developers have contributed to market instability.

• Strengthened Government Regulations:The Chinese government has implemented strict regulations to curb speculation and stabilize housing prices. As a result, real estate development projects and capital flows have slowed, leading to a contraction in the market.

• Current State:Since 2023, the Chinese real estate market has been in a correction phase, with notable price declines and reduced transaction volumes, particularly in major cities.

- Europe

• Rising Prices and Rent Burdens:In major European countries (such as the U.K., Germany, and France), housing prices continue to rise, with increasing rental costs adding to the financial burden on many households.

• Strengthened Rental Market Regulations:Countries like Germany and France have implemented rent caps to curb rent increases, though there is criticism that such regulations reduce market flexibility.

• Current State:The European real estate market remains stable, but inflation and rising interest rates are increasing the cost burdens for both homebuyers and renters.

- South Korea

• Concentration in Seoul and the Capital Region:In South Korea, real estate price increases are particularly notable in the Seoul metropolitan area. High demand and limited supply are driving prices upward, making it difficult for younger generations and those without homes to buy property.

• Government Regulations and Policies:The South Korean government has strengthened regulations to curb speculation, with policies including tax increases for multi-property owners, loan restrictions, and improvements to the housing application system to stabilize prices. However, price increases have not been fully contained.

• Current State:Although transaction volumes have decreased due to interest rate hikes and tighter government regulations since 2023, prices remain high.

The real estate market is a significant economic factor worldwide, but it faces various challenges.

1] Key Issues in the Real Estate Market

- Rising Housing Prices and Accessibility Issues

• Surging Housing Prices:Real estate prices are continuously rising in many countries, especially in major cities and commercial areas. This has made it increasingly difficult for younger generations and low-income groups to purchase or rent housing.

• Causes:Key causes include low-interest rate policies, accelerated urbanization, real estate speculation, and the growing value of real estate as an asset.

• Current State:Real estate prices have escalated sharply since the COVID-19 pandemic in 2020. Some countries have implemented policies to curb these price increases, but housing prices remain high.

- Imbalance in the Real Estate Market

• Supply and Demand Imbalance:In some areas, a housing shortage is causing prices to skyrocket, while in others, excess supply leads to falling property prices, creating significant market imbalance.

• Urban Concentration:Economic activities and populations are concentrated in major cities, leading to a downturn in local real estate markets and overcrowding in urban areas.

• Current State:This imbalance is prevalent in many countries, particularly in major cities of developed nations and large cities in developing countries, where housing shortages are worsening.

- Financial and Lending Issues

• Increasing Reliance on Loans:Many households take on substantial loans to purchase property, leading to a rise in household debt. If interest rates rise, repayment burdens could increase significantly.

• Impact of Rising Interest Rates:Since 2023, major central banks have raised interest rates to curb inflation, increasing loan rates and affecting the real estate market. This could reduce purchasing power and lead to a slowdown in the market.

• Current State:In countries with high household debt, rising interest rates are putting pressure on the real estate market. This is especially notable in countries like South Korea, Canada, and Australia, where household debt and interest rate hikes are significant concerns.

- Real Estate Speculation and Bubbles

• Speculative Investments:Excessive investment by some investors seeking short-term gains can inflate real estate prices beyond their actual value, creating a real estate bubble.

• Impact of Speculation:Speculative real estate transactions cause price instability and make it more difficult for those intending to buy homes for residential purposes.

• Current State:Speculation and bubbles in the real estate market are major issues in places like major Chinese cities, Canada, and South Korea. Some regions are implementing stricter regulations to curb speculation.

- Policy and Regulatory Issues

• Inadequate Regulation:Some countries lack sufficient regulations to stabilize real estate prices or prevent speculation, while excessive regulation can hinder market flexibility and dampen investment sentiment.

• Policy Failures:Policies such as rent caps or increased transaction taxes may unintentionally destabilize the market or fail to produce positive long-term effects.

• Current State:In countries like South Korea, China, and Germany, real estate policies continue to fluctuate between regulation and deregulation, with mixed impacts on the market.

- Environmental and Sustainability Issues

• Carbon Emissions:Real estate development and operations are among the high carbon-emitting industries, necessitating sustainable development and eco-friendly building technologies.

• Current State:Some countries have introduced green building certifications, such as LEED, but most real estate developments still do not adequately consider environmental sustainability.

2] Current State of the Global Real Estate Market

- United States

• Rising Property Prices:The U.S. real estate market experienced significant growth after the 2020 pandemic, with housing prices rising sharply. Low-interest rates and the increase in remote work boosted demand for suburban housing, leading to price surges in specific areas.

• Impact of Interest Rate Increases:Since 2023, as interest rate hikes became more frequent, mortgage rates have risen, reducing purchasing power. Consequently, transaction volumes have decreased, and the upward trend in prices has slowed.

• Commercial Real Estate Crisis:The expansion of remote work and e-commerce after the pandemic has decreased demand for office and commercial real estate, placing additional strain on the commercial real estate market.

- China

• Concerns of a Real Estate Bubble:China’s real estate market experienced rapid growth over recent decades, but concerns about a property bubble have increased. The high debt levels of major real estate developers have contributed to market instability.

• Strengthened Government Regulations:The Chinese government has implemented strict regulations to curb speculation and stabilize housing prices. As a result, real estate development projects and capital flows have slowed, leading to a contraction in the market.

• Current State:Since 2023, the Chinese real estate market has been in a correction phase, with notable price declines and reduced transaction volumes, particularly in major cities.

- Europe

• Rising Prices and Rent Burdens:In major European countries (such as the U.K., Germany, and France), housing prices continue to rise, with increasing rental costs adding to the financial burden on many households.

• Strengthened Rental Market Regulations:Countries like Germany and France have implemented rent caps to curb rent increases, though there is criticism that such regulations reduce market flexibility.

• Current State:The European real estate market remains stable, but inflation and rising interest rates are increasing the cost burdens for both homebuyers and renters.

- South Korea

• Concentration in Seoul and the Capital Region:In South Korea, real estate price increases are particularly notable in the Seoul metropolitan area. High demand and limited supply are driving prices upward, making it difficult for younger generations and those without homes to buy property.

• Government Regulations and Policies:The South Korean government has strengthened regulations to curb speculation, with policies including tax increases for multi-property owners, loan restrictions, and improvements to the housing application system to stabilize prices. However, price increases have not been fully contained.

• Current State:Although transaction volumes have decreased due to interest rate hikes and tighter government regulations since 2023, prices remain high.

- Emerging Markets (Southeast Asia, Middle East, etc.)

• Real Estate Development Boom:In emerging markets such as Southeast Asia, the Middle East, and Africa, urbanization and economic growth have fueled active real estate development. Real estate investments have surged in places like Singapore, Dubai, and Vietnam.

• Attracting Investors:Foreign investors and major corporations are actively pursuing real estate projects in these regions, with particular attention to commercial real estate and luxury residential developments.

• Current State:Emerging markets are in the early stages of development with high potential for long-term growth, though regulatory gaps and political instability present risks to these markets.

The global real estate market faces diverse challenges depending on each country’s economic conditions, interest rate policies, urbanization, and regulations. Key issues include rising housing prices, speculation, reliance on loans, and environmental concerns, with government policies and regulations continuing to adapt in response. Global real estate markets are affected by factors like interest rate hikes, inflation, and urban concentration, leading to greater price volatility.