[Asia Economy Reporter Kim Yuri] # Some types of 59㎡ (exclusive area) units in Mapo Raemian Prugio, Ahyeon-dong, Mapo-gu, Seoul have an average general price of 1.515 billion KRW according to KB Real Estate market prices. According to the Korea Appraisal Board, the entire 59㎡ area does not exceed 1.44 billion KRW even based on the upper limit average price. When simply calculating the loan limit, it is '0 KRW' based on KB prices, but changes to 449 million KRW based on the Appraisal Board's standard (based on the upper and lower average of complexes 1 to 4 at 1.345 billion KRW). This is because the government has completely banned mortgage loans on houses priced over 1.5 billion KRW.
On the 27th, according to the industry, the government is reviewing a plan to switch the market price used for housing loan regulations from KB Real Estate to the Korea Appraisal Board's statistics, raising concerns about market confusion. Earlier, Minister Kim Hyun-mi of the Ministry of Land, Infrastructure and Transport announced on the 25th at the National Assembly Land, Infrastructure and Transport Committee plenary meeting that they are considering switching the loan regulation standard from KB prices to Appraisal Board prices.
KB prices are generally higher than the Appraisal Board prices, which are usually based on actual transaction prices rather than asking prices. As a result, when simply calculating based on current loan standards by price range, some complexes exceeding 1.5 billion KRW, like the example above, change from '0 KRW loan' to 'over 400 million KRW loan available,' while in relatively lower price ranges such as 600 million KRW or 900 million KRW, loan limits may actually be reduced.
The complexes where loan amounts rapidly change from 0 KRW to over 400 million KRW are generally those priced around 1.5 billion KRW. Through the December 16th measures last year, the government set the loan-to-value ratio (LTV) for mortgage loans in speculative areas and speculative overheating districts to 40% up to 900 million KRW and 20% for amounts exceeding 900 million KRW. Loans are completely banned for prices exceeding 1.5 billion KRW. Currently, the government uses KB prices as the standard.
When switching to the Appraisal Board prices to calculate loan limits, the standard market price generally decreases. Accordingly, loans for houses priced below 1.5 billion KRW decrease. This is because the Appraisal Board prices are generally set lower than KB prices.
For example, in the case of Seongwon Sangteville 108㎡ in Garak-dong, Songpa-gu, Seoul, the average general price according to KB is 1.05 billion KRW, but the Appraisal Board's upper and lower average price is 890 million KRW. The calculated loan amounts based on these are 381 million KRW and 356 million KRW, respectively. If the price standard changes, the loanable amount decreases by about 25 million KRW. The same applies to mid-to-low priced apartments. For SK Bukhan Mountain City 59㎡ in Mia-dong, Gangbuk-gu, the KB average general price is 615 million KRW, but the Appraisal Board's upper and lower average price drops to 575 million KRW. The loan limits are 246 million KRW and 230 million KRW, respectively, showing a difference of 16 million KRW.
Comparing the overall situation, last month the median apartment price in Seoul was 918.12 million KRW based on KB prices and 846.84 million KRW based on Appraisal Board prices. The simply calculated loan limits were 363.62 million KRW and 338.74 million KRW, respectively, showing a decrease of 24.88 million KRW when changing the price standard.
In the industry, since loans for many mid-to-low priced houses will be significantly reduced and some complexes over 1.5 billion KRW may become eligible for loans of several hundred million KRW, it is believed that the consideration for switching standards should be more thorough to reduce market confusion. Currently, many prices are aggregated based on KB standards but not on Appraisal Board standards, so there are calls for improvements in this regard. The Ministry of Land, Infrastructure and Transport stated, "The minister's remarks were made with the intention that it is important to consistently use reliable statistics," and added, "In the future, the method of utilizing statistics for loan regulations will be reviewed in consultation with the Financial Services Commission, the relevant authority."
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