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Stan Rogers
Joined: 20 Aug 2010
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Lucas
Joined: 11 Sep 2012
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 Posted: Mon Feb 23, 2015 4:12 pm Post subject: |
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| Watch what happens when they lower interest rates in the next few months, like the rest of the world....... |
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Yaya
Joined: 25 Feb 2003
Location: Seoul
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| Posted: Mon Feb 23, 2015 4:35 pm Post subject: |
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I've been talking to a friend about this, and while he's been averse to buying, he has no intention of going to his home country so he's now considering buying.
Oh Korea. |
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jcd
Joined: 13 Mar 2012
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| Posted: Mon Feb 23, 2015 5:21 pm Post subject: |
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The current shortage of key money rentals is exacerbated by the fact that South Korean tenants are reluctant to pay monthly rent, which involves a comparatively higher financial burden than key money.
Does this sentence make any sense? I would say no.
There would be more key money rentals, if tenants are reluctant to pay monthly rent. |
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jvalmer
Joined: 06 Jun 2003
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| Posted: Mon Feb 23, 2015 5:30 pm Post subject: |
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| Lucas wrote: |
| Watch what happens when they lower interest rates in the next few months, like the rest of the world....... |
Their interest rates are already low, like 2% low. Although not at 0% like North America, and western Europe. Korea still has one of the fastest growing economies in the OECD, believe it or not. |
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Lucas
Joined: 11 Sep 2012
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| Posted: Mon Feb 23, 2015 5:48 pm Post subject: |
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Lucas wrote:
Watch what happens when they lower interest rates in the next few months, like the rest of the world.......
Their interest rates are already low, like 2% low. Although not at 0% like North America, and western Europe. Korea still has one of the fastest growing economies in the OECD, believe it or not. |
They'll lower it in the next few months, mark my words!
Then Jeonsae will go up even more. |
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jvalmer
Joined: 06 Jun 2003
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| Posted: Mon Feb 23, 2015 5:53 pm Post subject: |
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| Lucas wrote: |
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Lucas wrote:
Watch what happens when they lower interest rates in the next few months, like the rest of the world.......
Their interest rates are already low, like 2% low. Although not at 0% like North America, and western Europe. Korea still has one of the fastest growing economies in the OECD, believe it or not. |
They'll lower it in the next few months, mark my words!
Then Jeonsae will go up even more. |
They probably will, but I don't see a panic happening. Koreans are a stubborn lot, and will hold on to their property for a long long time. Also, lots of housing in Seoul is affordable, if you're willing to live in a 'villa', and not an apartment. |
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Lucas
Joined: 11 Sep 2012
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| Posted: Mon Feb 23, 2015 5:59 pm Post subject: |
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The current shortage of key money rentals is exacerbated by the fact that South Korean tenants are reluctant to pay monthly rent, which involves a comparatively higher financial burden than key money.
Does this sentence make any sense? I would say no.
There would be more key money rentals, if tenants are reluctant to pay monthly rent. |
People with secure jobs can get loans to pay for Jeonsae, then they just pay the interest of the loan, which is lower than paying monthly rent.
*assuming* the whole housing system doesn’t collapse and they get their key money back.
Now of course, the government secures up to X amount of the loan and you can PAY for insurance to cover the rest.
So you can pay interest on a loan, and then pay for insurance to live in a house for 'free'
The whole Jeonsae thing relies on a BOOMING economy.
Although the Korean economy is doing better than most western ones at the moment, that doesn’t mean @#$%.
It's like standing next to a REALLY FAT person to make you feel slimmer. |
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atwood
Joined: 26 Dec 2009
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| Posted: Mon Feb 23, 2015 6:53 pm Post subject: |
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| Lucas wrote: |
| Quote: |
The current shortage of key money rentals is exacerbated by the fact that South Korean tenants are reluctant to pay monthly rent, which involves a comparatively higher financial burden than key money.
Does this sentence make any sense? I would say no.
There would be more key money rentals, if tenants are reluctant to pay monthly rent. |
People with secure jobs can get loans to pay for Jeonsae, then they just pay the interest of the loan, which is lower than paying monthly rent.
*assuming* the whole housing system doesn’t collapse and they get their key money back.
Now of course, the government secures up to X amount of the loan and you can PAY for insurance to cover the rest.
So you can pay interest on a loan, and then pay for insurance to live in a house for 'free'
The whole Jeonsae thing relies on a BOOMING economy.
Although the Korean economy is doing better than most western ones at the moment, that doesn’t mean @#$%.
It's like standing next to a REALLY FAT person to make you feel slimmer. |
Koreans have traditionally seen it as a way to save. That mindset is very hard to change. |
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PRagic
Joined: 24 Feb 2006
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| Posted: Tue Feb 24, 2015 12:08 am Post subject: |
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| Because housing prices have quietly been falling the past 6-7 years. There was an uptick last year when they opened the loan spigots. The government wants people back in the market buying. If you buy, you're OK, but if you plunk down a huge lump on jeonsay, you'll get audited. No joke. |
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brier
Joined: 14 Dec 2009
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| Posted: Tue Feb 24, 2015 12:29 am Post subject: |
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| Lucas wrote: |
| People with secure jobs can get loans to pay for Jeonsae, then they just pay the interest of the loan, which is lower than paying monthly rent. |
Finance dummy here. How is it possible to just pay interest and not pay down the principle of the loan? |
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slothrop
Joined: 03 Feb 2003
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| Posted: Tue Feb 24, 2015 1:00 am Post subject: |
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edit
Last edited by slothrop on Fri Jul 10, 2015 12:35 am; edited 1 time in total |
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saram_
Joined: 13 May 2008
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| Posted: Tue Feb 24, 2015 5:03 am Post subject: |
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| brier wrote: |
| Lucas wrote: |
| People with secure jobs can get loans to pay for Jeonsae, then they just pay the interest of the loan, which is lower than paying monthly rent. |
Finance dummy here. How is it possible to just pay interest and not pay down the principle of the loan? |
It is what some Korean banks offer to people who meet specific requirements. The requirements are not easy to match though. Check out Woori bank in particular about it.
My own situation.
Put down 70 mill together with wife from savings, assistance etc..
Bank Put down 80 mill... to make a contract together with the realtor/house owner.
Total Cheonsae worth is 150mill.
We are paying just 3% of the 80 mill that the bank put down each month..
So basically our monthly 'rent' is just over 200k for a nice home.
No additional costs. This lasts for 2 years at which point it is either renewed.. or we find a diff place. Max of 8 years and the interest rate may increase a bit during later contracts.
When I see what people back home (especially) pay monthly either in rent or mortgage I feel we are really blessed.
(But maybe I am missing something)
Anyway- I expect we may see some big changes in the Korean economy soon for the worse including a large property crash.
Save as much as you can while you can is what I am thinking. |
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jvalmer
Joined: 06 Jun 2003
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| Posted: Tue Feb 24, 2015 5:59 am Post subject: |
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| saram_ wrote: |
| Anyway- I expect we may see some big changes in the Korean economy soon for the worse including a large property crash. |
At first I thought so, but now it's been like 6 years of people saying this. When will it crash? Also, housing prices are reasonable in most of the country. The ridiculous prices are essentially isolated to a few areas in the Seoul capital region, and perhaps parts of Busan.
Koreans aren't mortgage happy, and it's still pricey compared to North America. Plus banks still are reluctant, historically too, to grant the average Kim a full-on mortgage. Koreans use the Jeonsae system to save for an outright purchase. And if they can't afford that, some even move their whole families back into their parent's home. Yes, that includes wife, and kids.
I'm not worried about a property cash. I'm more worried about household debt, and how that can ripple through the economy. |
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Stan Rogers
Joined: 20 Aug 2010
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| Posted: Tue Feb 24, 2015 5:59 am Post subject: |
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| Here come the doomsday prophets again. |
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