[Asia Economy Reporter Kangwook Cho] Over the past year, more than half of homebuyers under the age of 40 in Seoul purchased houses using "gap investment," which involves buying a home with a jeonse deposit.
In particular, the proportion of gap investments among buyers in their 20s exceeded 70%. This is interpreted as a result of most buyers taking on debt to purchase homes due to anxiety caused by continued house price increases.
On the 22nd, Junho Cheon, a member of the National Assembly's Land, Infrastructure and Transport Committee from the Democratic Party of Korea, analyzed 193,974 real estate transaction "funding plans" in Seoul from March last year to July this year, submitted by the Ministry of Land, Infrastructure and Transport. According to the analysis, 52% of homebuyers aged 39 and under listed "succession of rental deposits" as part of their funding plans.
Since March 13 last year, anyone purchasing a house worth 300 million KRW or more in speculative overheated zones or regulated areas, or 600 million KRW or more in non-regulated areas, is required to submit a funding plan.
During the period, the average price of houses purchased in Seoul was 799 million KRW. The total amount of funds involved was approximately 155 trillion KRW.
The largest portion of funding came from real estate sale proceeds at 57 trillion KRW (36%). This was followed by rental deposits at 34 trillion KRW (22%), bank deposits at 23 trillion KRW (15%), mortgage loans at 18 trillion KRW (11%), other borrowings (such as family loans) at 5.4 trillion KRW (3.5%), and gifts/inheritances at 4.9 trillion KRW (3.2%).
Among 64,185 buyers aged 39 and under, who accounted for one-third of all transactions, 52% (33,571 cases) succeeded existing rental deposits. The average purchase price for these buyers was 697 million KRW. The most common funding source was rental deposits at 192 million KRW (28%).
In particular, buyers in their 30s were the most active in purchasing homes during this period, with 53,839 transactions. The average price was 741 million KRW, and 26% of their funding came from rental deposits (190 million KRW).
This was followed by real estate sale proceeds at 171 million KRW (23%) and bank deposits at 95 million KRW (13%). Other borrowings accounted for 4 million KRW (5.3%), and gifts/inheritances accounted for 35 million KRW (0.47%), which were not insignificant.
Buyers in their 20s purchased 10,134 homes. The average price was 472 million KRW, and the succession of rental deposits was recorded at 71%, indicating a significantly high proportion of gap investments.
The funding breakdown showed rental deposits at 210 million KRW (43%). Mortgage loans accounted for 63 million KRW (13%), bank deposits 52 million KRW (11%), gifts/inheritances 45 million KRW (9%), and other borrowings 40 million KRW (8%).
Assemblyman Cheon said, "To prevent reckless gap investments, it is necessary to alleviate the anxiety that owning a home is becoming increasingly difficult," adding, "We will actively support the government's supply measures such as the 3rd New Town and the 2.4 Plan to ensure they are implemented without disruption."
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