[7·10 Real Estate Measures] Reducing the Burden of 'Home Ownership' for Ordinary Citizens and Actual Buyers

Archive photo / Photo by Mun Ho-nam munonam@

[Sejong=Asia Economy Reporter Joo Sang-don] The government has decided to apply the special supply for first-time homebuyers to private housing as well and to expand the supply ratio to support genuine homebuyers in securing their own homes.

On this day, the government announced the "Housing Market Stabilization Management Plan" containing these details. This is the 22nd measure since the Moon Jae-in administration, following the June 17 real estate measures.

First, the government plans to expand the special supply for first-time homebuyers not only to public housing but also to private housing. The supply ratio will also be increased. For public housing, it will be expanded from 20% to 25%, and for private housing with a floor area of 85㎡ or less, 15% of the supply will be allocated in public development sites and 7% in private development sites. Regarding income criteria, the public housing will maintain the urban worker's average monthly income at 100%, while private housing will be expanded to up to 130% of the urban worker's average monthly income. Based on the 2019 urban worker's average monthly income, 130% corresponds to ▲5.69 million KRW for a 2-person household ▲7.31 million KRW for a 3-person household ▲8.09 million KRW for a 4-person household.

The income criteria for newlyweds purchasing a home for the first time will also be relaxed. For newlywed hope towns and private housing with a sale price of 600 million KRW or more, the income requirement will be expanded to 130% (140% for dual-income households) of the urban worker's average monthly income.

The acquisition tax reduction benefit currently allowed only for newlyweds purchasing a home for the first time will be expanded regardless of age or marital status. For properties priced at 150 million KRW or less, the full amount will be exempted, and for those priced between 150 million KRW and 300 million KRW (400 million KRW in the metropolitan area), half will be exempted.

Additionally, the government plans to lower the property tax rate for mid- to low-priced homes through the official price roadmap in October this year. The pre-sale volume, currently at about 9,000 units, will be significantly increased to more than 30,000 units.

Loan regulations for low-income and genuine homebuyers will be eased. Starting from the 13th, the loan-to-value ratio (LTV) and debt-to-income ratio (DTI) for housing loans in regulated areas will be preferentially applied with a 10 percentage point advantage.

Support for jeonse (long-term lease) and monthly rent loans will also be strengthened. For jeonse, the interest rate on the youth support loan for those aged 34 or younger will be reduced by 0.3 percentage points (from 1.8~2.4% to 1.5~2.1%), the loan target will be expanded from a deposit of 70 million KRW to 100 million KRW, and the support limit will be increased from 50 million KRW to 70 million KRW. In addition, the interest rate on youth-exclusive guaranteed monthly rent loans will be lowered by 0.5 percentage points.