Reuters wrote a piece this week on the rising "risk" of a housing glut in South Korea. Korea is one of the few places worldwide where housing prices have only seen moderate growth over the last decade.
This is a good thing.
Yet, reading Reuters, you would be surprised to learn just how terrible it is that housing prices haven't jumped like they do in Manhattan.
And unlike markets such as Hong Kong, Singapore and Sydney, South Korea has low immigration and few foreign buyers to stimulate sales and prices. (emphasis mine).
But why do prices need to be stimulated? To avoid a bubble. How can there be a bubble if prices are going lower? Because people are taking out large mortgages for these apartments, and so there is a mortgage bubble.
(God, there is always a bubble).
Housing inflation is easily one of the worst trends for young people in the world. We should be celebrating the fact that housing prices are going down — in fact, the government should be actively trying to lower the price of housing in desirable areas, rather than propping it up. Shelter should be getting cheaper over time, not more expensive.
I live in a city (and specifically, an island of that city) in which an apartment that sells for less than $1 million is considered news. That's sickening. If we want entrepreneurs to keep building and artists to keep dreaming, it starts with the cost of entry. Lower housing prices, stat.
Photo by future15pic used under Creative Commons.