Samsung Electronics and SK hynix Create a Wave of Stock Wealth... Will Money Flow Into Real Estate? [Why Are Stocks Rising?]

[Financial News] "These days, inquiries about buying have clearly increased. When the stock market is strong, the real estate market seems to pick up as well."That was the view of a real estate agent in Seoul. As the domestic stock market surged in a short period, led by a semiconductor rally centered on Samsung Electronics and SK hynix, attention is shifting to where the money will go next. With household paper gains from stocks in the first half of the year estimated to exceed 1,000 trillion won, analysts say the money created in the stock market could become a new source of demand for Seoul apartments.■ 1,146 trillion won created by the stock marketAccording to the financial investment industry on the 6th, Citibank Korea estimated that Korean households' potential stock capital gains in the first half of this year amounted to about 1,146 trillion won. That is roughly 2.7 times last year's 429 trillion won. Citibank also projected that the Korean stock market, which jumped more than 90 percent in the first half, would lift this year's annual Gross Domestic Product (GDP) and private consumption expenditures by 0.4 percent and 0.9 percent, respectively.
Kim Jin-uk, a researcher at Citibank, cited a Bank of Korea study and said that "for households living in jeonse or wolse housing, about 70 percent of stock gains tend to flow into the housing market." He added that this could further fuel the rise in the housing market in the Capital Region in the second half of the year.
Apartment prices in Seoul are also continuing to rise. According to the weekly apartment price trend for the fifth week of June, released by the Korea Real Estate Board (KREB) on the 2nd and based on June 29, apartment sale prices in Seoul rose 0.27 percent from the previous week. Although the pace of increase narrowed by 0.03 percentage points from the week before, prices have risen for 73 consecutive weeks since turning upward in the first week of February last year.
The cumulative rise in Seoul jeonse prices this year also reached 5.10 percent, almost matching the cumulative increase in sale prices, which stood at 5.11 percent.
KREB said that "demand continued to concentrate on major complexes, including redevelopment projects, preferred stationside locations, and large-scale apartment complexes, while steady buying inquiries led to transactions at higher prices."
Transactions are also picking up. According to LS Securities, apartment sale transactions in Seoul totaled 8,946 in May, up 18.9 percent from the previous month and marking a third straight month of growth. While nationwide apartment sale transactions fell 3.0 percent month on month to 51,585 households, Seoul alone continued to post an increase, moving in a different direction from the rest of the country.■ "20 billion won in stocks versus 20 billion won in real estate"In the real estate industry, there is a view that once financial assets grow beyond a certain level in Korea's asset structure, people may begin reallocating wealth into tangible assets, including real estate. A real estate agent in Seoul said, "It is rare to find someone holding 2 billion won worth of stocks, but there are far more people who own real estate worth more than 2 billion won." The agent added, "I often see people who have built wealth through stocks looking into better neighborhoods or newly built apartments at the same time."
The KB Financial Group Management Research Institute also identified a preference for key areas in Seoul and demand for moving up to better neighborhoods as the main features of this year's real estate market. The institute said the combination of a preference for new apartments and a shortage of supply is continuing to concentrate demand from buyers with sufficient assets in Seoul's core districts.
A securities industry official assessed that "in the past, rising real estate prices were the key factor in building wealth, but this time the stock market has created a massive amount of new assets." The official explained that this was driven by large paper gains among individual investors, especially in leading semiconductor stocks such as Samsung Electronics and SK hynix, as well as AI-related stocks and leveraged exchange-traded funds (ETFs).
However, it is difficult to conclude that a stock market boom will immediately lead to higher home prices. Interest rates, lending regulations, and housing supply policies are also major variables that shape the real estate market.
A financial investment industry official said, "Whether the money created in this rally will be spent, reinvested in other financial assets, or move into the real estate market is the key point to watch in the asset market in the second half of the year."
dschoi@fnnews.com Choi Du-seon Reporter