[2020 National Audit] The House Price Purchased by Seoul 2030 Is 730 Million KRW... 60% Is 'Debt'

Jinseongjun Lawmaker: "Only 42.9% of 2030 Housing Purchase Funds Are Own Capital"

Jinseongjun, Member of the Democratic Party of Korea./Photo by Dongju Yoon doso7@

[Asia Economy Reporter Onyu Lim] Over the past three years, the average price of homes purchased by people in their 20s and 30s in Seoul was 730 million KRW, with more than half of the purchase amount, 420 million KRW, financed through debt.

On the 20th, Jin Seong-jun, a member of the National Assembly Land, Infrastructure and Transport Committee from the Democratic Party of Korea, analyzed 384,000 cases of 'Funding Procurement Move-in Plans' (from September 2017 to October this year) submitted by the Ministry of Land, Infrastructure and Transport. The analysis showed that the average purchase price for those in their 20s and 30s who bought homes priced over 300 million KRW in Seoul was 730 million KRW. Of this, the proportion of self-funding was on average 42.9%, which amounts to 310 million KRW. According to Representative Jin, the remaining 420 million KRW (57.1%) was procured through borrowed funds, i.e., debt.

By age group, 12,000 people in their 20s bought homes in Seoul with an average purchase price of 610 million KRW. The average self-funding portion was 210 million KRW (34.9%) of the home price, and the remaining 400 million KRW, accounting for 65.1%, was financed through debt. For 109,000 buyers in their 30s, the average home purchase price was 810 million KRW, with 56.4% of the home price financed by borrowed funds.

Representative Jin emphasized, "The proportion of borrowed funds among these 20-30-year-old homeowners reached 57%, which is relatively high compared to other age groups." The proportion of borrowed funds in home purchase financing for other age groups was 48.5% for those in their 40s, 41.7% for those in their 50s, and 31.2% for those aged 60 and above.

In contrast, for 310 homeowners under 20 years old and teenagers who are unable to take out loans, the proportion of self-funding was relatively high at 54.5% and 64.8%, respectively. Representative Jin added that an investigation into the sources of funds for these minor homeowners is necessary.

Representative Jin pointed out that Seoul City should actively expand equity accumulation-type housing with low initial costs so that low-income people in their 20s and 30s can enjoy housing stability. He said, "I question whether it is normal that one must incur this much debt to purchase a home," adding, "To expand the supply of owner-occupied housing affordable to people in their 20s and 30s, equity accumulation-type housing, which reduces initial purchase costs to about a quarter, should be supplied, and public rental housing should also be expanded."

In response, Seo Jeong-hyeop, Acting Mayor of Seoul, said, "I agree with Representative Jin's remarks," adding, "In that regard, we have decided to introduce equity accumulation-type housing primarily targeting young people in their 20s and 30s and newlyweds, and we will continue to review policies from various angles to help them secure housing."