Lee Hyo-sik is Finance Desk editor at The Korea Times. He manages finance-related stories on macroeconomics, banks, stocks, bonds, crypto etc. He is passionate about covering what's happening in Korea's financial industry and explaining it to both Korean and non-Korean readers. You can reach him at leehs@koreatimes.co.kr. Your insights and feedbacks are always appreciated.
Stock market gains will ultimately flow into housing
By Lee Hyo-sik
President Lee Jae Myung’s high-profile pledge to divert liquidity from Seoul’s overheated housing market to the stock market seems to have worked as the main benchmark KOSPI has soared past 9,000 points in recent weeks, driven largely by massive retail buying.
On top of several policy changes over the past year aimed at mitigating the “Korea discount,” the local equity market has received a much-needed boost from the semiconductor boom, fueled by the unprecedented memory chip demand from global tech firms for artificial intelligence.
Shares of Samsung Electronics and SK hynix, which now account for nearly 60 percent of the country’s market capitalization, have soared to all-time highs since the beginning of the year.
But some investors have become increasingly uneasy as to whether the semiconductor cycle may have peaked despite the rosy market outlook, while others have become nervous due to sharp market swings following the debut of single-stock leveraged exchange-traded funds tied to the two memory chip giants on May 27.
Against such growing market volatility, many investors have begun thinking about cashing out to lock in their gains and parking the money in relatively safer assets, such as apartments in Seoul and Gyeonggi Province. In fact, the data showed quite a number of stock investors have already realized capital gains and bought homes with the proceeds.
According to a recent report by Citibank Korea, Korean households were estimated to hold a total of 1,146 trillion won ($749 billion) in both realized and unrealized capital gains from equity investments as of June. The report said that for households that do not own their own homes, about 70 percent of capital gains tend to flow into the housing market, suggesting that such households are likely to use much of their stock investment gains to purchase homes.
In parallel, the Bank of Korea also recently issued a report that shows money raised by selling stocks and bonds accounted for about 8.9 percent of the funds used to buy homes in January, up from 4.9 percent in May 2025. The data, submitted by the Ministry of Land, Infrastructure and Transport to Rep. Kim Jong-yang of the main opposition People Power Party, also showed an increase to 13.2 percent in April.
Ministry data also indicated that from January to April this year, home buyers raised about 3.72 trillion won by selling stocks and bonds and used the money to buy apartments. Of the 3.72 trillion won, 65.5 percent, or 2.44 trillion won, was spent on apartments in Seoul’s affluent Gangnam, Seocho and Songpa districts.
These statistics clearly illustrate that liquidity eventually flows back into the housing market as people tend to lock in their stock investment capital gains and put the money into safer assets. In particular, households without homes tend to use much of their investment gains to purchase one. With growing stock market volatility and rising home prices due to the shortage of new apartments, more investors are expected to move their money to the housing market.
Nowhere is this more evident than Dongtan in Hwaseong, Gyeonggi Province, with prices rising a cumulative 11.38 percent as of the fourth week of June, marking the largest increase in the country, according to the Korea Real Estate Board.
Dongtan’s apartment prices have soared in recent months, powered by a wave of liquidity generated by the ongoing semiconductor boom, as more employees at Samsung Electronics and SK hynix buy homes using their record-high bonus payouts and low-interest employee loans. These hefty bonus packages are reshaping the housing markets near major semiconductor clusters in southern Gyeonggi Province.
Samsung Electronics recently agreed to pay 10.5 percent of its annual operating profit as a special performance bonus to employees in its semiconductor unit, which could amount to 37.8 trillion won this year. The company also introduced a housing loan program that offers up to 500 million won at an annual interest rate of 1.5 percent. SK hynix, which allocates 10 percent of its annual operating profit to employee bonuses, is expected to set aside about 26 trillion won for incentive payments this year, while offering housing loans of up to 100 million won at an annual interest rate of 1.5 percent.
The decision to cash out stocks and purchase an apartment is driven by more than investment returns. Many Koreans continue to view housing as an asset that will appreciate over the long term, while a home's location and apartment brand remain important markers of social status.
Concerns about further increases in home prices often encourage households to channel stock market gains into home purchases. These anxieties have compounded as the housing supply remains tight. Policies that impose heavier taxes on owners of multiple homes and encourage owner occupancy have also reduced the number of homes available for sale or rent, while new housing construction is slowing.
Efforts by the Lee administration to boost the stock market while simultaneously stabilizing housing prices will prove difficult to achieve. If a stronger stock market generates additional household wealth while the housing supply remains constrained, a significant portion of those gains will certainly flow into residential property purchases, adding further upward pressure on home prices.
Mr. President! Stocks and Seoul apartments move in the same direction, unfortunately.
The writer is finance editor at The Korea Times.