As we enter 2025, real estate forecasts are flooding in. Many familiar faces in the industry—names you’ve likely heard before—are offering their perspectives. The consensus seems to revolve around the classic “low in the first half, high in the second” scenario. They predict a stagnant market in the first half of the year, followed by a rebound in the latter half. But isn’t this the same narrative we hear every year? Let’s dig deeper.
Can We Trust Expert Predictions?
Take 2023 as an example. Early in that year, 96% of surveyed real estate experts predicted a price decline, yet the market moved in the opposite direction. Why does this happen? The answer often lies in the inherent limitations of expert opinions, which are shaped by their cautious, institutional frameworks.
- Late 2022: Widespread fears of a financial crisis emerged due to a potential default on project financing (PF) by major firms like Taeyoung Construction.
- In such an atmosphere of uncertainty, experts naturally lean toward conservative predictions. After all, a bold but incorrect forecast could harm their reputations or professional standing.
This demonstrates that expert predictions are often reactive and may not be the most reliable source for gauging market direction.
The Pitfall of Viewing Real Estate Through a Moral Lens
Many people approach the real estate market with a sense of moral absolutism:
- “In tough economic times, housing prices should fall.”
- “Who would buy property in this economy?”
While these perspectives may resonate in political discourse, they fall short in economic and investment contexts. Let’s use gold as a comparative example.
Gold Prices vs. Real Estate: Assets Unaffected by Economic Cycles
Gold serves as a prime example of how certain asset values remain unaffected—or even rise—during economic turmoil.
- Gold’s intrinsic value as a low-liquidity, finite asset means it is insulated from fluctuations tied to economic growth or income levels.
- Similarly, real estate functions as a low-liquidity, stable asset, where prices are influenced more by currency value than economic conditions.
Key Insight: Currency Value Drives Asset Prices
It’s not that gold prices or housing prices are rising—they remain relatively stable. What’s actually happening is a decline in currency value, which makes these assets appear more expensive.
- During periods of economic uncertainty, total money supply (M2) continues to grow. This constant infusion of liquidity into the market devalues the currency.
- Political instability and low economic growth often lead to stimulus measures, further driving down currency value.
The Investor’s Perspective: How to Respond in 2025
As an investor, here’s how you should think about 2025:
- 1% GDP growth forecast? → Expect stimulus measures and increased liquidity in the market.
- Prepare for currency devaluation:
- Assess how much more debt you can leverage based on your current income.
- Determine your budget for investing in low-liquidity assets like real estate or gold.
- Don’t be distracted by short-term political instability; instead, focus on long-term asset value appreciation.
Conclusion: A Data-Driven Approach to Real Estate Investment
Stop viewing the real estate market through a lens of moral imperatives. Instead, base your decisions on economic data and market dynamics:
- The total money supply (M2) always trends upward.
- Low-liquidity assets, such as real estate or gold, are not directly tied to economic performance.
- When currency value declines, the relative value of these assets rises.
Next time you read a headline forecasting economic doom, train yourself to think like an investor:
- “Growth below 1%? → Stimulus measures are coming.”
- “More liquidity in the market? → Currency devaluation is inevitable.”
- “Devalued currency? → Asset prices will rise.”
In 2025, adopt an investor’s mindset to identify opportunities in the market and position yourself for long-term gains.