[8·4 Supply Measures] "Buy a 500 Million Won House by Paying Only 225 Million Won and Repay Over 20-30 Years" What Is Equity Accumulation Housing? (Comprehensive)

Introduction of 20-30 Year Installment 'Equity Accumulation Type Sale Housing'... Special Supply for 3040
Basic 30-Year Term for Houses Over 900 Million Won... 20 or 30 Years Option for Lower Prices
'Public Sale' with Equity from the Start, 'Rent-Then-Sale' After 8 Years Lease
Must Meet Conditions Like 150% of Urban Worker Average Monthly Income, Assets Under 215.5 Million Won

[Asia Economy Reporter Kim Yuri] The Seoul Metropolitan Government is promoting a policy to expand the supply of sale housing to open up opportunities for homeownership for the '3040 generation,' who are considered major real demanders in the housing market but face difficulties due to small asset sizes, low subscription scores, and loan regulations.

A representative measure is the introduction of a new sale housing model called the 'Equity Accumulation Sale Housing.' This method allows buyers to initially acquire 20-40% of the ownership equity by paying that portion of the sale price upfront, and then gradually pay off the remaining equity over 20 or 30 years, similar to saving. Compared to the existing public sale method, which requires full payment before moving in, this reduces the initial financial burden and is expected by the city to expand homeownership opportunities for the 3040 generation, who have fewer chances to accumulate assets. This plan was also included in the government's August 4 supply measures announced that morning.

The income criteria will be slightly relaxed considering the government's subscription system reform plan. The threshold will be eased to 150% of the average monthly income of urban workers, with asset limits set at a combined real estate (land + building) value of 215.5 million KRW or less, and automobile value of 27.64 million KRW or less. However, a lottery system by ranking will be applied for some non-homeowners.

There are two models: the 'Public Sale Model' and the 'Rent-then-Sale Model.' For operation periods, high-priced homes exceeding 900 million KRW based on sale price will default to a 30-year plan, while for homes priced below 900 million KRW, buyers can choose between 20 or 30 years. The Public Sale Model supplies homes as equity sales from the start and will be prioritized through amendments to the Housing Act. At this time, resale restrictions and mandatory residence obligations will be imposed, similar to existing public sale housing.

The Rent-then-Sale Model has an institutional basis and can be applied to private projects. It prepares an 8-year rental period followed by conversion to equity sale. The sale price at the 8th year, which serves as the basis for equity sale conversion, will be calculated by adding an appropriate interest rate to the initial rental housing sale price at move-in, allowing buyers to predict future conversion costs.

Applying this to the 59㎡ unit in Magok 9 Complex supplied by Seoul Housing and Communities Corporation (SH Corporation) through public sale in the first half of this year, under the equity accumulation sale housing, paying 25% of the sale price of 500 million KRW, i.e., 125 million KRW, secures the home initially. The remaining 75% can be paid in increments of 15% every 4 years, approximately 75 million KRW each time.

However, for the public equity not acquired during the operation period, tenants must pay rent at the level of Happy Housing. As equity gradually increases, the initial deposit paid can be refunded and used to acquire more equity, and the rent will decrease over time. Based on similar Happy Housing supply cases in the area, the initial rent payable at move-in is roughly a deposit of 100 million KRW and a monthly rent of 140,000 KRW.

Therefore, combining equity acquisition and rent, the actual amount the buyer must bear is calculated. At move-in, the buyer pays 225 million KRW, combining equity acquisition cost and rental deposit. For subsequent equity acquisitions, deducting the refunded rental deposit, the cost for acquiring 15% equity is about 60 million KRW (approximately 15 million KRW annually). If a lump sum is insufficient, part of the rental deposit can be converted to monthly rent; converting up to half reduces the total burden to 170 million KRW, but monthly rent increases to 310,000 KRW.

To support real demanders in homeownership, Seoul City decided to add only the regular deposit interest rate to the initial sale price when acquiring additional equity. This means the total future payment amount is fixed at the time of equity acquisition. This measure considers the increased burden on buyers due to price rises at sale conversion seen in past policies.

Once resale restrictions end, home disposal becomes possible. The entire home can be sold to a third party at market price, and the public and the buyer will share proceeds according to the equity ratio at the time of sale. The public will only judge whether the price is fair before consenting to the sale. This mechanism prevents short-term speculative demand by lowering disposal profits when personal equity is low and naturally encourages long-term residence by buyers. The city explains that longer residence periods reduce housing transaction frequency, which can stabilize prices.

Equity accumulation sale housing is already implemented overseas. The UK operates a 'shared ownership' system, and similar policies exist in other countries. The city explained, "We analyzed existing cases to leverage strengths and address weaknesses, aiming to develop a system suited to Korea's circumstances." In the UK, residents can acquire equity in 25% increments at market price, and pay rent on the remaining equity at about 3% of the housing price, making it closer to private housing and burdensome for low-income households.

Seoul plans to apply equity accumulation sale housing to as many public sale units supplied by the city as possible. It will actively request legal amendments from the central government to expand this model to the private sector, enabling the 3040 generation to hold homes long-term at more affordable prices.

Meanwhile, the city will also expand projects that develop underutilized idle sites or aging public facilities into housing for youth and newlyweds. Included in the government's August 4 housing supply plan, the 11 complexes proposed by Seoul will supply 12,000 units by 2023. For underutilized idle site discovery projects, the city and district-owned lands will be used to supply 10,000 units across eight sites including Seoul Medical Center and Myeonmok Administrative Complex Town, and SH Corporation-owned sites in Magok, Munjeong, and unsold units in Cheonwang will supply 2,000 units.

Seo Jeong-hyeop, Acting Mayor of Seoul, said, "This housing supply expansion plan is the result of joint efforts by the central government and Seoul City to solve the biggest livelihood challenge of stabilizing the housing market. In particular, we hope that the newly introduced equity accumulation sale housing by Seoul City and SH Corporation becomes a beacon of hope for homeownership among the 3040 real demanders, spreads to the private sector, and significantly increases cases of purchasing homes at affordable prices and holding them long-term."