Dude, Where’s My Condo?

Here’s some South Korean inside baseball for you — apparently the government is trying to “wean” people off of the traditional “jeon-se” system of purchasing an apartment rather than renting one by the month (“wol-se“).  (Jeonse is actually a bit more complicated than that, as the landlord takes your lump sum and invests it for interest for the length of your stay in said apartment.  You’re supposed to get it all back when it’s time to move out, but corruption and bad investments aren’t uncommon.)

Here’s the score:

“The Ministry of Strategy and Finance and the Ministry of Land, Infrastructure and Transport came up with the measure to ‘advance the local housing rental market.’ It expects Korea to undergo a major transition from a rental market dominated by jeonse, the two-year lease contract with large deposits, into the kind of monthly rent-dominated market that prevails in the West.”

As an American I’ve always been stunned and confused by how things work here.  Monthly rent is basically only something that college students and some ex-pat English teachers do.  Much like Europeans, young Koreans will live at home with their parents until they get married (there are exceptions, of course).  Unlike America, there’s not much of a stigma against young people who finish college and move back home until they marry.

So here’s the problem — if you’re a young Korean male, you can’t just marry your sweetheart and rent for a few years before moving out to the ‘burbs, buying a starter house, and reproducing.  The expectation for a male is that he will have the cash on hand to buy an apartment outright.  Renting by month is out of the question, traditionally, because real estate is a form of financial security here in Korea, not just for the new wife but also for her parents, grandparents, cousins, etc.

It’s a crazy system for a country facing a looming demographic catastrophe due to a lack of interest in marriage and babies.  Or better, a lack of ability to do so in a country where the price of admission into married life is a home.  More than once I’ve heard the laments of my male friends who simply don’t make enough to start a family and my female friends who meet nice guys who simply don’t make enough to satisfy the demands of their parents and society writ large.  (Because this being a competitive country, just any old apartment won’t do.  It has to be in a “good” neighborhood, meaning the neighborhoods with the best schools.)

So like a lot of what the South Korea government does, it’s a good idea.  The system is simply unsustainable, and it’s directly contributing to a looming problem of too many elderly and not enough baby future-workers and baby future-tax-payers to support them.

And in my opinion, it’s not going to go anywhere for the usual reasons.  Who wants to be the first mother and father of a jeonse-less daughter (i.e., a deadbeat husband)?  See also “Who wants to be the first mother and father of a kid not taking English classes at hagwon?”

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