Half a million new homes promised by the government
President Yoon Suk-yeol has promised quality housing for younger people, many shut out of the market as a result of the rapid increase in prices during the Moon Jae-in administration.
The announcement was made during a meeting headed by Prime Minister Han Duck-soo on Wednesday.
“The weight of reality that young people face at a time when they should be excited in designing their future and taking up challenges is not light,” Prime Minister Han said. “Anxiety over things that are most basic, including finding a quality job and a stable residence, is growing.
“Our goal in policies for young people is to build a bridge of hope.”
He said the government has decided to significantly increase the number of publicly built apartments sold at an affordable price.
Public apartments are those built by government-owned developers, such as Land and Housing Corp. (LH), owned by municipal governments, including Seoul Housing and Communities Corp. (SH) and Gyeonggi Housing and Urban Corp. (GH), or funded by these developers or state-owned financiers.
The biggest change compared to the Moon administration is that the latest plan is focused on selling publicly supplied apartments at an affordable price, whereas the previous administration's focus was on supplying publicly-leased apartments.
According to the Land Ministry, in the last five years, 147,000 publicly-supplied apartments were sold. Of those, only 5,000 were in Seoul.
Half of the new publicly supplied apartments will be sold at 70 percent of the market value. Buyers need to live in the units for at least five years.
They also have to be 39 or under, have incomes under 140 percent of the average income of single person households and have less than 260 million won of net assets.
For newlyweds or couples with children six or under, monthly income has to be 130 percent or less than the nation’s average for single people. That ratio is 140 percent when it’s a double-income family. Net assets have to be 340 million won or less.
As of 2021, the average monthly income of a person living alone in the city is 4.18 million won a month.
Loans will be capped at 80 percent of the property's value up to a limit of 500 million won.
For an apartment with a market value of 500 million won, qualified buyers will be able to purchase the government-supplied unit for 350 million won. Of that, 280 million won can be financed, and a 70 million won downpayment will be needed.
The buyers will have access to 40-year mortgages with an annual interest between 1.9 and 3.0 percent.
Another 150,000 million apartments will go to general purchasers for 80 percent of the market value. They will be able to borrow up to 400 million won for 30 years at a 70-percent loan-to-value ratio. Rates will be between 2.15 percent and 3.00 percent.
The government has increased the ratio of those that are randomly picked for general-type publicly supplied apartments from the current 15 percent to 30 percent.
Many young people are still having trouble buying apartments despite the fall in value.
BY LEE HO-JEONG [lee.hojeong@joongang.co.kr]
with the Korea JoongAng Daily
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