South Korean young people turn to cryptocurrency, stocks, and real estate, and their debts soar

The household debts of young Koreans born after the 1980s have soared to US$22.7 billion from US$3.9 billion last year.

According to the data released by Korea’s Democratic Party Representative Kim Han-jung today by the Korea Financial Supervisory Service (FSS), It is said that Shows that the high level of loans is attributable to increased investment in cryptocurrencies, stocks and real estate.

Although millennials and Generation Z accounted for approximately 34% of Korea’s total household debt in 2019, by 2020 this number has grown to 45.5% and is now 50.7%. Representative Kim called on the government to take measures to help manage debt and reduce the risk of default, noting:

“In the case of soaring asset prices, they have been over-lending to buy real estate. The younger generation has been immersed in stock investment and buying cryptocurrency.

FSS data provides a certain degree of granularity, showing that mortgage loans for these generations have soared from US$2.8 billion to US$16 billion, while credit loans have increased from US$1.1 billion to US$6.7 billion.

Rising debt has become a fundamental part of the broader socioeconomic story of Korean youth.Bloomberg article Published in the fall of 2020, the title is aptly titled “Break the South Korea where millennials turn to day trading to get rich”, quoting a 27-year-old:

“In South Korea, there are only two ways for us in our 20s to get rich: either win the lottery or buy and sell stocks. We know that no matter how much we earn, we will never get rich. We will never make enough money to buy a house. “

Although this article focuses on day trading of traditional stocks on apps such as Robinhood, the same underlying dynamics-low wages, “job market freezes” and rising real estate prices-are increasing their reliance on bank loans. They think they can get returns in the medium to long term by making other investments, such as cryptocurrency and real estate.

Lee Han Koo, a professor of economics at Suwon University, described this dynamic as “despair” and pointed out that this socioeconomic environment has contributed to the perception of young people that transactions are “a once-in-a-lifetime opportunity.” Get out of the insurmountable deadlock.

related: South Korea’s “Kimchi Premium” is back: Is Bitcoin’s rally beginning to heat up?

According to the International Monetary Fund report Starting in August 2020, 180% of Korean household debt disposal income is now Highest Between OECD countries. As in many OECD countries, house prices have been rising continuously since 2014.And the country’s per capita gross national income is USD 32,047Last fall, the median apartment price in Seoul was close to US$800,000, while the price of an apartment in Seoul was close to US$800,000.

Locked out of the real estate market and trapped by stagnant wages, Koreans turned to speculation-from Hedge Fund From biotechnology to encryption-is the core of Bitcoin (Bitcoin) The infamous “Kimchi Soak” in 2017. As the pandemic has now intensified long-term economic trends, Bitcoin’s premium in South Korea soars to annual highs again This spring.