[7·10 Real Estate Measures] Households with Annual Income of 100 Million Won Also Eligible for Newlywed Special Supply... Introduction of First-Time Special Supply for Private Housing (Comprehensive)

Government Launches Full-Scale Effort to Soothe 2030 Generation

Significant Relaxation of Income Criteria for Special Supply
Households with Income up to 140% of Average Urban Workers Can Apply
Annual Income Exceeds 100 Million KRW for 4-Person Household

First-Time Special Supply Introduced for Private Housing

Hong Nam-ki (center), Deputy Prime Minister and Minister of Economy and Finance, Kim Hyun-mi (right), Minister of Land, Infrastructure and Transport, and Jin Young, Minister of the Ministry of the Interior and Safety, are moving on the 10th at the Government Seoul Office in Jongno-gu, Seoul, to announce a comprehensive real estate plan including strengthening the comprehensive real estate tax for multi-homeowners. Photo by Kang Jin-hyung aymsdream@

[Asia Economy Reporter Lee Chun-hee] The government has officially begun efforts to appease the 2030 generation. The income criteria for special supply, which had drawn criticism for being accessible only to the "gold spoon" class, have been significantly relaxed. Newlywed couples with a combined annual income of up to 100 million KRW can now apply for the special supply for newlyweds. To increase opportunities for first-time homebuyers, the special supply previously limited to public housing will now be introduced to private housing as well.

On the 10th, Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance, announced the "Housing Market Stabilization Supplementary Measures" during a briefing after the 10th Emergency Economic Central Countermeasures Headquarters meeting held at the Government Seoul Office. He said, "We could not help but empathize with the earnest concerns of people in their 20s and 30s who feel that owning a home is becoming increasingly difficult."

The most notable change is the significant relaxation of income criteria for special supply. Currently, the first-time special supply is available only to those with an average monthly urban worker income of 100% or less from the previous year, and the special supply for newlyweds is limited to 120% (130% for dual-income) of the average monthly income for private housing. For a four-person household this year, only those with a dual-income monthly salary of 8.09 million KRW or less are eligible. For the first-time special supply, a four-person household must have a monthly income of 6.94 million KRW or less. Notably, there is no separate dual-income exception for the first-time special supply.

Although President Moon Jae-in personally summoned Minister of Land, Infrastructure and Transport Kim Hyun-mi on the 2nd and instructed to "expand the quantity of first-time special supply," the government appears to have accepted criticism that many newlywed couples with realistic home-buying capacity are excluded from the income criteria unless they are "gold spoon" families.

Relaxation of income requirements for special supply of private housing for newlyweds under the July 10 real estate measures. (Provided by the Ministry of Land, Infrastructure and Transport)

For the first-time special supply, the existing standard of 100% of the average monthly urban worker income remains for national housing. However, through this measure, the first-time special supply will be mandated for private housing as well, with 15% for public land and 7% for private land, raising the income criteria to 130%. For a four-person household, this corresponds to 8.09 million KRW.

The income thresholds for the special supply for newlyweds will also be raised from the current 100% (120% for dual-income) for public housing and 120% (130% for dual-income) for private housing. For newlywed hopeful towns priced above 600 million KRW and private housing (limited to first-time homebuyers), the threshold will be increased to 130% (140% for dual-income). For a four-person household, 140% of the previous year's average monthly urban worker income is 8,716,879 KRW. When calculated as annual income, this amounts to 104,602,546 KRW, meaning households earning over 100 million KRW annually can now apply for special supply.

The asset criteria are expected to remain at current levels. For the first-time special supply, the combined value of real estate assets including land and buildings must be 215.5 million KRW or less, and if owning a car, its value must be 27.64 million KRW or less. Unlike this, the special supply for newlyweds has no separate asset requirements, which had intensified the "gold spoon" subscription controversy. However, Minister Kim Hyun-mi stated during the briefing Q&A, "There is nothing under review at this time," but added, "We will consider it."

Expansion Plan for Special Supply for First-Time Homebuyers in the July 10 Real Estate Measures (Provided by the Ministry of Land, Infrastructure and Transport)

Along with raising the income criteria for special supply, the supply volume is also expected to increase. The proportion of first-time special supply for national housing will be raised from the existing 20% to 25%, and for private housing, supply will be allocated at 15% for public land and 7% for private land, limited to units of 85㎡ (exclusive area) or less, which is the size of national housing. The special supply for newlyweds, which was also expected to increase in proportion, only saw a relaxation of income requirements without an increase in supply share.

As a result, the total proportion of special supply?including first-time buyers, newlyweds, institution recommendations, multi-child families, and elderly parent support?will approach 85% for national housing, 58% for private housing on public land, and 50% for private housing on private land. Special supply will account for more than half of all housing supply types.

However, the 40s and 50s age group is strongly opposing these changes. The Ministry of Land, Infrastructure and Transport has repeatedly explained that "even if people in their 30s cannot receive general supply due to low points, they make up the highest proportion of winners through various special supplies," but there are complaints that this increase in proportion may cause the 40s and 50s, who have accumulated points, to face "reverse discrimination."

Minister of Land, Infrastructure and Transport Kim Hyun-mi is answering reporters' questions after announcing a comprehensive real estate policy including strengthening the comprehensive real estate holding tax for multi-homeowners at the Government Seoul Office in Jongno-gu, Seoul on the 10th. Photo by Kang Jin-hyung aymsdream@

In addition, the government proposed various policies under the banner of "reducing the burden on low-income and actual demanders." First-time homebuyers will receive acquisition tax reductions. Previously, the government had reduced acquisition tax by 50% for first-time homebuyers purchasing homes priced at 300 million KRW or less, but this benefit was limited to couples married less than five years.

Going forward, any first-time homebuyer will be eligible for acquisition tax reductions. The 300 million KRW threshold will be expanded to 400 million KRW in the metropolitan area. Homes priced at 150 million KRW or less will receive a full exemption nationwide.

Regarding strengthened support for jeonse and monthly rent loans, the interest rates for the policy loan called "Butimok Loan" will be lowered. The interest rate for youth Butimok Loans, currently at 1.8?2.4%, will be reduced by 0.3 percentage points. The loan limit will also be increased from the current deposit limit of 70 million KRW to 100 million KRW, with the support limit raised accordingly. The interest rate for general Butimok Loans, currently 2.1?2.7%, will be lowered to the same level.

The pre-sale volume for the 3rd generation new towns will also be significantly expanded. The government initially announced plans to supply 9,000 units through pre-sale starting next year for the 3rd generation new towns. This will be expanded to include public land outside the 3rd generation new towns, aiming for over 30,000 units of pre-sale.