"Buy the best area you can afford now" ... What is a 25-year real estate expert's investment strategy? [fn Insight]

[Financial News] Kim Hak-ryeol, head of the SmartTube Real Estate Research Lab, whom Financial News met on the 20th, said of the latest tax reform plan, "I don't know what the purpose is." Still, he advised investors that "the answer is to buy the best area you can afford now." Having conducted nearly 2,000 subscription demand surveys over 25 years, dating back to his time at Gallup Korea Research Institute, he stressed that location and demand should come before policy.
Kim said the people who should move most aggressively under the new reform are end-users preparing to move up to a better area. He said, "Those who plan to move to a better area should actively take advantage of this opportunity," and added, "If you are already in a better area, you probably do not need to sell."
His reasoning is the shift in demand. He explained, "What this tougher tax plan has done is weaken the resolve of people who wanted to buy homes worth more than 3 billion won," adding, "That demand is now moving to homes under 3 billion won." He went on to say, "Older homeowners who cannot afford the holding tax are selling 5 billion won homes and moving down to the 3 billion won range, while move-up demand is rising from below." He assessed that mid-to-upper areas such as Mapo, Seongdong District, Dongjak District and Gangdong are becoming even firmer.
For non-occupying single-homeowners, he offered two options. He said, "You can move in yourself or switch to monthly rent," and explained, "If the comprehensive real estate tax rises by 6 million won a year, divide that by 12 and it comes to 500,000 won a month. The calculation is that you can simply charge that much more in monthly rent instead of raising the jeonse deposit." However, he added, "I would tell people not to sell if the property is worth more than 4 billion won," noting, "It is not in a tax-free range, so you have to pay taxes no matter what, and you also have to repay the loan. Once you sell, there is no easy way to buy it back."
His advice for people in their 30s and 40s without a home who are targeting apartments in Seoul was blunt. He said, "Erase the administrative boundaries of Seoul, Gyeonggi Province and Incheon," and added, "Then move to the best area you can reach with your own financial power."
The key is proximity to work. Kim said, "People buying their first home are likely to have no children, so proximity to work is the right criterion. If that is not possible, look at the subway network that can get you there in one trip," and advised, "If you commute to Gangnam, look along Seoul Subway Lines 3, 7 and 9, as well as the Shinbundang Line, and search as far as Gyeonggi Province and Incheon."
He emphasized, "For first-time buyers, loans can cover 70% to 80% in non-regulated areas. If the home costs 500 million won, you can borrow 400 million won, so you only need 100 million won. If you do not buy now, you will be in big trouble."
He pointed to the attitude of policymakers as the reason. He said, "The president and the deputy prime minister both said they are not trying to control prices. That means they cannot control them," adding, "There is no chance of bringing prices under control during this term."
Still, he said careful selection is needed in the mid-price segment. He noted, "The median apartment price in Seoul is 1.6 billion won, and homes in the 1.5 billion won range rise only about 60% of the time," adding, "Look at just three things: whether the sale price and jeonse price are rising, and whether transactions are continuing." He also said, "Even in Gangnam District, there are apartments whose prices have not risen at all for 20 years. That share gets larger as you move to lower-tier areas."

His assessment of the policy was harsh. Kim said, "Even the people making the policy and the people affected by it do not know its purpose," and cut to the point: "This was not rationalization or normalization. It was a plan to raise national taxes."
He also pointed out that multi-homeowners have already disappeared from the market since 2021. He said, "They are like a dried squid. No matter how hard you squeeze, no water comes out," adding, "So they created new targets of attack: non-occupying single-homeowners and ultra-expensive homes. In the process, innocent victims emerged."
He took particular issue with retroactive application. He said, "They asked people to buy unsold homes by promising to exempt capital gains tax, and told them to register as rental business operators, then took away the benefits. What did these people do wrong?" He stressed, "This is not about debating constitutionality. It is about stopping policies that stab people in the back." On the proposal to lower the threshold for joint spousal ownership from 1.8 billion won to 800 million won, he said, "It is such a bizarre system that they will probably scrap it," adding, "Since it is not a finalized plan, it is best to leave it out of the discussion."
He also said the policy sequence was wrong. Kim said, "They should have talked about supply and easing loan rules first, and then introduced the tax reform plan. But if you hit someone first and then hand them a rice cake, the pain from the blow makes them unable to see the rice cake," adding, "Seoul needs redevelopment, reconstruction and remodeling all at once, while Gyeonggi Province and Incheon need to be connected through new towns and regional transport networks. That is the Ministry of Land, Infrastructure and Transport's core mission."



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