Incheon, South Korea – Until recently, Lee Ju-hyeon did not take the idea of buying a home seriously.
But when Lee, 33, began to look for a place to live with her soon-to-be husband, she was shocked to see how much prices had soared.
“We are looking for a house about 66 square metres within the 400 million won ($316,000) price range,” Lee, who works as a journalist, told Al Jazeera. “But now the prices are unrealistic.”
Only five years ago, Lee would have found her search far easier.
The average apartment in Lee’s district of Eunpyeong, northwest Seoul, cost 470 million won ($370,000) in 2017, according to KB Kookmin Bank’s house price tracker.
It now exceeds 900 million won ($709,000).
Like many other prospective home buyers, Lee is now considering migrating northwest to neighbouring Gyeonggi Province, where prices are lower than Seoul.
Under outgoing left-leaning president Moon Jae-in, South Korea has experienced an extraordinary surge in property prices.
Yoon Seok-yeol, his conservative successor who takes office on May 10, has pledged to address the issue by cutting taxes and easing regulations on the building of new homes.
The average sale price of a home in the greater Seoul area shot up from 341 million won ($274,000) in May 2017, when Moon was inaugurated, to 626 million won ($503,000) as of March 2022, according to the Korea Real Estate Board.
The average cost of a Seoul apartment, the most sought after type of property in South Korea, climbed to greater heights still, rising from 607 million won ($488,000) to 1.2 billion won ($944,000) over the same period, according to KB Kookmin Bank data.
Moon, a former human rights lawyer who campaigned on closing the gap between rich and poor, made stabilising housing prices a key agenda of his administration, implementing more than 20 related measures, including raising taxes and constraining mortgage loans.
“Our government’s resolve in stabilising the housing market, protecting actual demand, and controlling speculation is firm,” Moon said in his New Year’s speech in 2020.
“We will not lose the war against housing speculation.”
Many economists, however, say Moon’s policies in fact aggravated the situation.
In a 2020 survey by the Korean Economic Association, more than 70 percent of economists who responded said the administration’s policies, which focused on trying to tame speculation rather than increasing housing supply, made the situation worse.
“Designating certain areas as ‘speculation-ridden areas’ and introducing a permit system for transactions sent a signal to people that the prices will go up,” Kim Jun-seong, a professor at Kyung Hee University in Seoul, said in a response to the survey.
“This wasn’t something the government, which has more information than individual market participants, should do, and I believe this affected the housing price surge a lot.”
But while the red hot market has left many young first-time buyers behind, it has created big winners, too.
Mo Ji-woong, a 37-year-old photographer, bought a house in Gimpo, 20km west of Seoul, when he and his girlfriend decided to live together four years ago.
“‘Why on earth do you plan to buy a house in times like this? Can’t you see the prices are so high?’ they used to say,” Mo told Al Jazeera, recalling his friends’ reaction at the time.
“Many of my friends are left-leaning, and they more or less had faith that the Moon administration would bring down house prices.”
Mo said his Gimpo apartment is now worth twice what he paid for it.
Despite being aimed at cooling prices, some of the government’s mortgage policies have been blamed for making it difficult for would-be buyers who might otherwise be able to afford a home.
Moon’s administration cut the loan-to-value ratio – the amount a buyer is allowed to borrow relative to the price of a property – in Seoul from 70 percent to 40 percent for properties valued up to 900 million won, with the ratio further reduced to 20 percent for amounts in excess of the 900 million won threshold.
For would-be buyers like Lee, the rules have made getting a loan a struggle.
“Our combined income isn’t that small, but somehow it becomes an impediment to getting a loan from the bank,” Lee said.
“I even looked for government-subsidised loans, but they are only available to people on lower income,” she added. “All this doesn’t accommodate the reality.”
In a country where real estate accounts for more than 60 per cent of household assets, the increasing unaffordability has resulted in a yawning generational gap in house ownership and wealth.
An analysis of the 2020 Korea Housing Survey shows that house ownership nosedives in people younger than 40.
“The housing ladder for the Korean middle class had been somewhat stable for those born in the 1970s,” Cho Gwi-dong, an independent economic researcher, told Al Jazeera.
“But it begins to falter for those who were born after 1981. When it comes to those born in the late 80s, housing mobility just collapses.”
This gap helps explain why generation Z and millennial South Koreans are so antagonistic towards the older generation, Cho said.
Moon’s housing policy was widely considered a key factor in Yoon’s victory over the ruling party candidate, Lee Jae-myung, in March’s presidential election. During his campaign, Yoon promised to cut property and capital gains taxes and boost the housing supply by easing regulations.
However, experts say it may take some time to see Yoon’s housing policy promises fully realised, while some experts warn that deregulating the market could stimulate prices further.
“While the market expectation for deregulation is high, the new administration is likely to gradually push ahead with deregulation,” Ha Seo-jin, a senior researcher at the Hana Institute of Finance think-tank, told Al Jazeera.
The most anticipated deregulation affecting construction might come after an easing of financial regulations, Ha added.
“Hearing that they will ease the loan regulation makes me excited,” Lee said. “But I’m also worried the prices might go up as well. It’s complicated, but at least I guess I’ll be less worried when I go to the bank for a loan.”
Mo, on the other hand, believes that there is little the government can do about the market.
“To me, Yoon’s housing policy sounds like empty words just to appease the people,” he said.
“Every administration has done that. At the end of the day, it’s about how people adapt to a new administration and a new policy.”