When 'Geumbubunri' Happens, 57% of Seoul Transactions Are 'Missing'

Kim Sang-hoon, member of the United Future Party. [Photo by Yonhap News]

[Asia Economy Reporter Lee Chun-hee] Amid the government's continued high-intensity real estate measures, a 'financial separation' theory to block real estate transaction fund procurement through finance is emerging. However, criticism arises that this is an unreasonable claim given that about 57% of housing transactions in Seoul are financed through loans.

According to the '2019~July 2020 Financial Institution Loan-Included Transaction Status' submitted by the Ministry of Land, Infrastructure and Transport to Rep. Kim Sang-hoon of the United Future Party on the 3rd, a total of 168,638 houses priced between 300 million and 1.5 billion KRW were traded in Seoul from January last year to last month. Among these, 96,825 cases, or 57.4%, were financed through loans from financial institutions.

The transaction price range was set excluding houses under 300 million KRW, which are not subject to mandatory submission of fund procurement plans, and houses over 1.5 billion KRW, for which mortgage loans were banned in speculative overheated districts including Seoul under the government's December 16 real estate measures last year.

According to the recent status, during the past 19 months, except for only two months?March and last month?17 months saw transactions including financial institution loans exceeding half of total transactions. In August last year, 6,300 out of 9,978 cases, or 63.1%, were supported by loans.

In particular, previously, only 'financial institution loan amounts' were recorded on the fund procurement plan, but after the new fund procurement plan, which requires detailed classification into mortgage loans, credit loans, and other loans, was implemented on March 13, contracts show a sharp increase in fund procurement through credit loans.

Among 5,567 transactions in March after March 13, 555 cases (10.0%) included credit loans, which rose to 16.5% the following month and nearly doubled to 19.9% in June. Due to government loan regulations, so-called 'Yeongkkeul' loans, which even use credit loans, have increased.

Rep. Kim said, "If financial assistance is blocked when purchasing a home, only cash-rich people will be able to buy houses in our country," adding, "Those responsible for making people 'Yeongkkeul' for hundreds of millions of won are the Moon Jae-in administration, and responsible public officials should refrain from remarks and actions that disregard the reality of ordinary citizens."