Young Koreans’ debt soars as they turn to crypto, stocks and real estate

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Household debt for young Koreans born from the 1980s soared to $ 22.7 billion, from $ 3.9 billion last year.

Data from South Korea’s Financial Supervisory Service (FSS), released today by Representative Kim Han-jeong of the Democratic Party of Korea, indicates high lending levels are attributable to increased investment in cryptocurrencies , stocks and real estate.

While millennials and millennials accounted for around 34% of total household debt in Korea in 2019, that figure rose to 45.5% in 2020 and is now at 50.7%. Representative Kim called for government action to help manage debt and reduce the risk of default, saying:

They have lent excessively to buy real estate amid soaring asset prices. Younger generations have buried themselves in investing in stocks and buying cryptocurrencies.

FSS data provides a degree of granularity, revealing that loans guaranteed by these generations have grown from $ 2.8 billion to $ 16 billion, while credit loans have grown from $ 1.1 billion to $ 16 billion. $ 6.7 billion over the year.

Rising debt has become a staple in the larger socio-economic history of young Koreans. A Bloomberg article published in the fall of 2020, aptly titled Broke Millennials Turn to Day Trading to Strike It Rich in Korea, quoted a 27-year-old man who said:

In Korea, we, in our twenties, have only two ways to get rich: either winning the lottery or trading stocks. We know we will never be rich no matter how much money we earn. We will never earn enough to buy a house.

As the article focused on the day-to-day shift from traditional stocks to apps like Robinhood, the same underlying dynamic of suppressed wages, a frozen job market, and rising house prices fuel their addiction. bank loans to make other investments they think they can afford. medium to long term, such as crypto and real estate.

Lee Han Koo, professor of economics at Suwon University, called the dynamic desperate, noting that this socio-economic environment has fueled the perception among young people that commerce represents a unique opportunity to emerge from an insurmountable situation. . dead end.

Related: South Korea’s ‘Kimchi Bounty’ Is Back: Is The Bitcoin Rally Starting To Heat Up?

According to an IMF report from August 2020, Korean household debt income of 180% is now the highest among OECD countries. House prices, as in many OECD countries, have seen an unbroken tear since 2014. While the country’s gross national income per capita is $ 32,047, the median apartment price in Seoul, where half live. of the population, and half of businesses, was nearly $ 800,000 last fall.

Locked out of the housing market and trapped by stagnant wages, Koreans are turning to speculation ranging from hedge funds to biotechnology to crypto. premiums in Korea hit year-round highs again this spring.

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