Why the ruling party’s policy chief says home prices will fall within 20 years

According to The Financial News, Han Jeoung-ae, Chair of the Policy Committee of the Democratic Party of Korea (DPK), argued that there is "a considerable possibility that land and housing prices nationwide will fall significantly within 20 years," citing high land prices per unit area and the rapid pace of population aging.
On the 28th, Han posted an article titled "A clear warning given to the Republic of Korea (ROK)" on her social networking service (SNS) account and attached statistical data on land assets in the ROK and Japan.
Commenting on the data, she explained, "When we compare it with recently released statistics from Japan, the total land value of Japan, which has a national territory of 370,000 square kilometers, is about 1,500 quadrillion won (applying an exchange rate of 10 to 1), whereas the total land value of our country, with a territory of 100,000 square kilometers, has already exceeded 1,200 quadrillion won."
She went on, "In terms of real estate, our land price per unit area is more than three times higher than Japan’s," adding, "In Japan, land prices remain at about 60% of the value of productive assets, while in our country they are approaching 120%." Productive asset value refers to the total value of assets that generate goods and services and create income and wealth. The fact that land prices exceed this level, she suggested, can be interpreted as evidence that a high-cost economic structure is becoming entrenched.
She also presented data on the projected aging trend over the next 20 years and said, "This shows a significant possibility that the nationwide average land and housing prices in our country will fall considerably within 20 years," interpreting that real estate prices could plunge as demographic changes unfold. She warned, "It is also difficult to gauge the impact this will have on households and the financial sector." Her analysis suggests that an economy heavily concentrated in real estate could face serious risks if aging-driven shifts in demand and supply lead to imbalances.
Finally, Han stressed, "We need to manage this carefully from a mid- to long-term perspective, and above all, I will work to continuously improve systems and craft policies so that the asset-building structure, which is excessively skewed toward real estate, can shift toward productive capital."
bng@fnnews.com Kim Hee-sun Reporter