[8·4 Supply Measures] Introduction of Equity Accumulation Type Sale to Prevent 'Lotto' Controversy

[Asia Economy Reporter Yuri Kim] The government plans to pilot a 'share accumulation-type' sales method that allows payment of the sale price of public housing in installments over up to 30 years to prevent 'lottery-style sales' through the August 4th measures. The number of pre-sale units within the planned public housing sites will also be significantly expanded from the initial 9,000 units to 60,000 units. Through this supply plan, the government intends to allocate more than 50% of the increased supply to first-time buyers, youth, and newlyweds.

Notably, the pilot introduction of share accumulation-type sales housing is included in the 'Plan to Expand Housing Supply in the Seoul Metropolitan Area and Surrounding Regions.' This pilot will support homeownership for first-time buyers and other non-homeowners by allowing them to acquire housing shares over a long period within the public sale units.

The share accumulation-type sales housing refers to housing where non-homeowners with insufficient funds pay a certain share of the sale price upon move-in and acquire the remaining shares in installments over a long period while residing in the home.

For example, buyers pay 40% of the sale price upfront and pay the remaining 60% in installments over 20 or 30 years. The 60% share is held by the supplier, such as Korea Land and Housing Corporation (LH) or Seoul Housing and Communities Corporation (SH Corporation), and the buyer gradually increases their share according to the amount of sale price paid.

This method will be applied to public reconstruction public sale units and newly secured public housing sites. To prevent speculation, measures such as a 20-year resale restriction and residency requirements are being considered. Specific details on the share acquisition period and resident selection methods will be announced in the second half of this year. Final adjustments are also underway regarding profits related to selling the house mid-term. The likely method is to divide profits according to the share ratio at the time of sale.

Additionally, the government will significantly expand the number of pre-sale units within already planned public housing sites (300,000 units in the metropolitan area and a total of 770,000 units) from the initial 9,000 units to 60,000 units. They plan to conduct 30,000 pre-sales in 2021 and another 30,000 in 2022. Pre-sale applications will begin in the third quarter of next year when the application system is established. The government aims to increase predictability of future supply for real demand buyers and alleviate waiting and purchase demand. Pre-sales will be conducted 1 to 2 years before the main sale, with move-in taking 3 to 4 years.