South Korean households' shadow debt - JEONSE deposits

Korea's unique "jeonse" system is the concept of providing interest-free loans between individuals with the right to use a house as collateral. The amount is more than you can imagine, and the period is usually two years.

In consideration of regional representation, we would like to provide data on the total amount of "jeonse" deposits in Seoul.

 

* Korea's dollar exchange rate as of today is 1330 won.

 

1. Monthly sum of "jeonse" deposit for apartments in Seoul (unit: $10,000)

The average monthly "jeonse" deposit for July 2021 to July 2023 was $6.41 billion.

 

2. Deposit for 2 years by Seoul district area

The total amount of "jeonse" deposits for apartments in Seoul is $160.3 billion.

In addition to Gangnam-gu, Songpa-gu, and Seocho-gu, which are called the three Gangnam districts, Gangdong-gu has attracted 41% of "jeonse" deposits.

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3. Seoul's "jeonse" deposit to determine real estate prices in S. Korea

A report by the Korea Economic Research Institute showed that the total amount of "jeonse" deposits nationwide, including apartments, amounted to approximately 1,058 trillion won.

South Korea's household debt is actually worth 3,000 trillion won, more than 150 percent of GDP, rather than the Bank of Korea's 1862 trillion won announced.

 

To support this, we used a very small unit of "jeonse" deposits in apartments in Seoul as an example, and we are at a time when we are worried about whether Korea will be the only country in the world that has not experienced household debt adjustment or a major crisis like the U.S. subprime crisis in the near future.

 

Korea is using a government-led loan expansion policy called "special home loan" even though the world is strengthening its internal stability by tightening high interest rates to stabilize prices.

The Bank of Korea is currently unable to raise its key interest rate. So in an interview with the media, I'm only warning, "If you buy a house now, you can be in trouble." However, Koreans are "buying a house with debt" as the government wishes

Obviously it was the government that gave the signal to buy a house. If there is a problem, surely the Government will say that there is no fault. That is the current attitude of the Korean government.

However, apparently this "special home loan" is a government-led "buy a house with debt." I'd say it's just Ver2.0".

Korea's household debt is still rising today, high interest rates, although housing prices may soar again like in 2021, or face a crisis that has never been experienced before.