[Beginner's Guide] The 'Sudden' Increase in Special Supply Income Criteria... Should I Aim for It Too?

Expansion of Special Supply Proportion and Relaxation of Eligibility Requirements
Special Supply Now Available for Dual-Income Households Earning Over 100 Million KRW Annually Based on 3-Person Household Criteria

[Asia Economy Reporter Lee Chunhee] When you become a real estate reporter, you sometimes get unexpected KakaoTalk messages from friends. "How do I apply for a housing subscription?" "What is first priority?" For the 2030 'Burin-i (Real Estate + Child)', for whom the subscription savings account is just an account their parents opened when they were young, I am trying to create a guide.

Recently, there has been a series of good news for the 2030 generation who have found it difficult to buy a house. The government has significantly increased the supply ratio of special supply for first-time homebuyers and newlyweds, where 2030 are the main beneficiaries, and this time, they have also greatly relaxed the income requirements. How much has it increased?

Income criteria criticized for 'those who can actually afford a house can't even pass the threshold'

Currently, for private housing, 75% of the special supply for newlyweds (priority supply) is given to those with a monthly average household income of 100% (120% for dual-income) or less of urban workers' households. The remaining 25% general supply has a somewhat higher limit, allowing up to 120% (130% for dual-income) of the monthly average household income, but this has still been criticized as a narrow gate.

Based on this year’s data, the previous year (2019) monthly average household income (100%) by household size of urban workers is ▲1 person: 2,645,147 KRW ▲2 persons: 4,379,809 KRW ▲3 persons: 5,626,897 KRW ▲4 persons: 6,226,342 KRW ▲5 or more persons: 6,938,354 KRW. In the actual subscription process, for households with 5 or more members, an additional 655,729 KRW per person is added to the 100% standard, applying criteria such as ▲6 persons: 7,594,083 KRW ▲7 persons: 8,249,812 KRW ▲8 persons: 8,905,541 KRW. For 1 to 3 person households, a unified single standard is set at 5,554,983 KRW for 100% income criteria.

For a 3-person household, to receive priority special supply for newlyweds in private housing, income must be 5.55 million KRW (6.67 million KRW for dual-income) or less, and for general supply, if income exceeds 6.67 million KRW (7.22 million KRW for dual-income), application is not possible. The 130% dual-income income standard translates to an annual salary of approximately 86.66 million KRW. In fact, based on Seoul standards, it is difficult to save up the approximately 900 million KRW price of a unit through earned income alone without significant parental support.

According to data submitted by Kim Sang-hoon, a member of the National Assembly Land, Infrastructure and Transport Committee from the People Power Party, from the Ministry of Land, Infrastructure and Transport, among 174 newlywed special supply winners in complexes with a price per 3.3㎡ over 30 million KRW from 2018 to July this year, 164 (94.2%) were in their 20s and 30s. Naturally, the winning rate among 2030 is high since the special supply targets newlyweds, but Kim’s analysis suggests that under current income criteria, without parental support or separate assets, even if selected, it is difficult to prepare funds for actual move-in.

Newlywed special supply possible up to 160% income standard... 3-person dual-income annual income 106.68 million KRW

As these issues continued to be raised in the National Assembly, Minister of Land, Infrastructure and Transport Kim Hyun-mi repeatedly stated that she would consider raising the income criteria. This plan was finally presented concretely on the 14th.

On the 14th, the government announced that by January next year, related laws will be amended to increase the proportion of general supply in special supply for newlyweds and first-time homebuyers, and to raise income criteria. The income criteria for special supply will remain the same, but the proportion will be reduced from 75% to 70%, and the general supply proportion will be increased to 30%. Also, for private housing, the income criteria for general supply in newlywed special supply will be expanded from the current 120% (130% for dual-income) to 140% (160% for dual-income).

This means that for a 3-person household, the monthly income limit will increase from 6.67 million KRW (7.22 million KRW for dual-income) to 7.78 million KRW (8.89 million KRW for dual-income). Converted to annual income, this is 93.32 million KRW (106.68 million KRW for dual-income), allowing a significantly larger number of households to benefit from the increased income criteria.

Similar improvements are planned for public housing. Currently, the newlywed special supply in public housing applies a uniform income standard of 100% (120% for dual-income) without distinction between priority and general supply. Going forward, public housing will also be divided into 70% priority supply and 30% general supply, with the income criteria for general supply relaxed to 130% (140% for dual-income). Especially for the 30% general supply, the current point-based selection system based on income, number of children, and subscription savings payment frequency will be changed to a lottery system.

The income criteria for first-time homebuyer special supply will also be significantly changed. Currently, public housing applies an income standard of 100% or less, and private housing applies 130% or less. Going forward, these standards will apply to 70% priority supply, and the remaining 30% will have relaxed income criteria: up to 130% for public housing and up to 160% for private housing. Since first-time homebuyer special supply selects winners by lottery if all criteria are met, this is the biggest good news for newlyweds without children.

However, dissatisfaction with the government's continuous expansion of special supply policies is also emerging. Those who were previously excluded due to high income welcome the change as correcting 'reverse discrimination,' while those who currently meet the income criteria express mixed reactions, saying that the special supply, created to provide fair opportunities to low-income groups, is becoming effectively meaningless. Additionally, in the case of newlywed special supply, the absence of asset criteria still leaves room for 'gold spoon subscription' concerns.