June 24, 2017, 04:28:09 AM

Author Topic: Jeonse Loans  (Read 6276 times)

Offline iamsam

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Re: Jeonse Loans
« Reply #40 on: June 19, 2017, 02:20:25 PM »
Yeah, I've seen them and they keep building more. What's their end game if they can't get the market price? Don't the companies/landlords/developers have loans to pay back as well?  Trying to understand their illogical rationale? Gonna be a lot of bankruptcy and fire sales in the future.

This article just came out.  http://www.koreatimes.co.kr/www/nation/2017/06/281_231432.html

Average home price in Seoul in 600,000,000.  While average household income last year came to 51.24 million won ($45,185)....   12 years to pay off a house using every cent you make..  Actually many more years than that with interest payments.

Offline Pecan

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Re: Jeonse Loans
« Reply #41 on: June 19, 2017, 02:28:39 PM »
We have been waiting 8 years for it to correct ;)

So do you think the prices can keep rising forever?  Even though wages are stagnant and many people are in a serious debt?  The prices are artificially high because gov't intervention not because of economic forces.  Everything the gov't manipulates eventually loses.  People that think they are "rich" because of the equity in their house are in for a big surprise when the other shoe drops.  If too many "equity-rich homeowners" decide to cash in on their homes, there won't be enough demand to buy them at over inflated prices and the prices will drop.  All it takes is drop in value to trigger a sell-off.
I'm in agreement with you 100%.

Just saying that we have been waiting a long time.

It has to crash, but the question is how much longer can the Korean government prop when interest rates continue to rise in the US.

Offline Savant

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Re: Jeonse Loans
« Reply #42 on: June 19, 2017, 02:43:04 PM »
There is too much market speculation and artificial price rising. The wife and I have been to a lot of new apartment showrooms in Songdo, Dongtan and around Anyang. The prices seem to be extortionate, particularly if other recently built apartments raise the "premium" for that whole area.

I think too many couples want to jump into the "game" by taking out huge loans to get a new apartment in an up and coming area. They hope that the 300 million home that they've just bought can increase the premium by at least 20 million in a short time. I think the PGH government introduced a rule that the occupants must live in a new apartment for a minimum time before they can re-sell at a premium. Otherwise, prices would just start rising too fast leading to more debt.
« Last Edit: June 19, 2017, 05:47:33 PM by Savant »

Offline mountainman

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Re: Jeonse Loans
« Reply #43 on: June 19, 2017, 02:46:43 PM »
Go for it.

Just be sure to do a check on the owner / property before you decide. They are supposed to disclose if the property is tied to anything, like a debt, at the time that the contract is signed. They will tell you that it is nothing to worry about, but that's up to you. I don't risk it myself, but that is up to you. If the landlord does come into financial difficulty, the property runs the risk of being auctioned off, possibly leaving you homeless, and 2nd in line to get your money back.

If you do the checks yourself, it streamlines the whole process, and saves the temptation of signing on a place that has higher risk.

Offline jimskins

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Re: Jeonse Loans
« Reply #44 on: June 19, 2017, 05:29:44 PM »
Like Pecan we've been waiting for the last 6-7 years too for the market to go but sucessive governments have continued to find creative ways to keep it propped up.  Frustrating.  They might keep the the plates spinning for another couple of governments yet, but they can't beat demographics.

In 10 years the oldest of the baby-boomer 6 child generation will start to pass away and see off their homes.  This will happen just in time for the key housing buying group (35-45yrs old) to begin to be filled by the yep, you guessed it, the 1 child generation.  Oh dear oh dear.

But keep building those apartments anyway you lunatics.

Offline JNM

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Re: Jeonse Loans
« Reply #45 on: June 19, 2017, 05:36:05 PM »
Is it the real estate that's inflated, or the won?

Maybe a bit of both.

Offline zola

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Re: Jeonse Loans
« Reply #46 on: June 19, 2017, 05:38:40 PM »
A guy who was in our conversation group said that he does not worry about the Korean housing market crashing. As he put it, the Korean property market is buttressed by the growing numbers of Chinese buyers and the Chinese market as a whole.
When another person asked "well what happens when the Chinese bubble pops?" he laughed and said it could never happened....

Offline Pecan

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Re: Jeonse Loans
« Reply #47 on: June 19, 2017, 06:07:59 PM »
Many banks will become insolvent when the bubble bursts or will simply be left holding the title to hundreds of thousands of homes.

I say this because too many Koreans do not actually own their home/apartment outright, so when they die, there won't be anything to pass on to their children apart from debt.

Any clue as to what will happen to the value of the KRW? ;)


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