Gov't wary of chip boom liquidity spilling into housing market

A visitor looks out over apartment complexes from Mount Nam in Seoul, May 8. Yonhap

Policymakers are growing increasingly concerned that a wave of liquidity generated by the ongoing semiconductor boom could spill over into Korea's already overheated housing market, fueled by record-high bonus payouts and low-interest employee loans at Samsung Electronics and SK hynix.

Industry estimates suggest that bonus payouts and employee housing loan programs at the two chipmakers could unleash as much as 53 trillion won ($34.6 billion) in liquidity by next year, raising worries about further pressure on the housing market.

The figure includes about 23 trillion won in bonus-related cash and more than 30 trillion won in low-interest housing loans available to employees.

The estimates come as both companies prepare to roll out large bonus packages driven by the global artificial intelligence-driven semiconductor boom.

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 based on forecasts that it will post an operating profit of 260 trillion won this year. The company also offers housing loans of up to 100 million won at an annual interest rate of 1.5 percent.

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. Given estimates that the chipmaker will post an operating profit of 360 trillion won for this year, the bonus pool could amount to about 37.8 trillion won.

The company has also introduced a housing loan program that offers up to 500 million won at an annual interest rate of 1.5 percent.

Early signs of the impact from these hefty bonus packages are already emerging in housing markets near major semiconductor clusters in southern Gyeonggi Province.

According to the Korea Real Estate Board, apartment prices for Dongtan New Town in Hwaseong, Gyeonggi Province, surged 2.22 percent in the third week of June from a week earlier, marking the fastest growth nationwide. The area has emerged as one of Korea's hottest housing markets this year, with prices rising 9.57 percent year to date.

Local media have reported a rise in contract cancellations in the area after home prices surged following Samsung's May 27 agreement to pay sizable performance bonuses. The price rally has prompted some sellers to walk away from existing deals and pay double compensation in order to secure higher sale prices.

Presidential chief of staff for policy Kim Yong-beom speaks at press briefing in Rome, June 12 (local time), during President Lee Jae Myung's state visit to Italy. Yonhap

The growing pool of liquidity generated by the semiconductor boom has emerged as a policy concern for the Lee Jae Myung administration, which has pledged to stabilize the overheated housing market.

While the government maintains that it would be inappropriate to interfere in corporate employee benefit programs, it is increasingly concerned that company-backed loan schemes run counter to financial authorities' efforts to curb household borrowing.

Kim Yong-beom, presidential chief of staff for policy, warned Saturday that wealth generated by the semiconductor boom could eventually flow into the housing market.

"The real test will come later this year and early next year, when bonus payments are actually made and export earnings begin flowing into the domestic economy," Kim wrote on Facebook. "Looking back, this kind of money has repeatedly found its way into the real estate market."

Kim called for what he described as a "normalization of property taxation," saying that property and capital gains taxes should be adjusted in a reasonable manner.

His remarks come as the government prepares to unveil its annual tax revision package next month.

President Lee Jae Myung has also signaled support for higher property taxes.

During a press conference on June 8, Lee said Korea's property tax burden remains relatively low compared with other countries, and argued that higher taxes could encourage owners of speculative properties to list more homes on the market.