Property Bubble in Seoul

Remember the late 1980s? When the Japanese were taking over the planet, buying everything in site? Then remember when the bubble popped?

Well, Seoul is smack in the middle of a bubble herself…

One need only read the local rags to see a daily argument over insane measures going on in Gangnam on the south side, from kidnappings, to school threats (so parents can get their own kids in), to ’stingent measures’ from the government to cool off prices, that– if they don’t work, will be followed by ‘even more stringent measures’. (oooh. we’re scared now!) One telling statistic: 67.2% of the population sees property as the best means to increase wealth (history shows it is the stock market), but this is understandable after the Korean market melted 5 years ago. No stock is as safe as a high rise on the south-side of the river, right?

Every day some pop-off gives his 20 won on the whole thing, but these amount to little more than handwringing and empty rhetoric. From today: “By whatever means, the government needs to deal with speculation. But a path should be left open for investment” and “To open the path of retreat and prevent money from gathering mold is the role of politics.” Whatever.

KoreaTelecom recently laid off 5000, and more will soon follow from the other leading manufacturers. This, to me, is the sign of a coming pop. I give it about 4-5 months more. Right when those guys unemployment benefits start running out, and their credit starts to collapse along with it, we’ll see investment companies call in their mortgages or try to consolidate their holdings, and the whole thing will come crashing down.

Careful with that stick…