[2023 Budget] Housing and Urban Fund for Low-Income Groups 'Reduced'

[Asia Economy Reporter Cha Wanyong] The Ministry of Land, Infrastructure and Transport's Housing and Urban Fund budget for next year has been reduced by approximately 2.3 trillion KRW compared to this year. Since a significant portion of the reduced amount comes from the housing fund budget aimed at stabilizing housing for low-income groups, controversy is expected.

On the 30th, the Ministry of Land announced that it has prepared a '2023 budget' of 55.8885 trillion KRW, including a housing fund of 32.5105 trillion KRW and an urban fund of 798 billion KRW. The combined total of the two funds is 33.3085 trillion KRW, which is 2.3334 trillion KRW less than this year's budget (35.6419 trillion KRW).

Looking into the detailed items of the Housing and Urban Fund budget, out of 29 housing fund items, the budgets for 14 items including multi-family purchase rental, national rental, and public rental were reduced. The amount reaches a staggering 6.2439 trillion KRW.

Among these, the budgets for loan funds such as national rental (decreased by 451.6 billion KRW), public rental (115.6 billion KRW), jeonse rental (1.0208 trillion KRW), multi-family purchase rental (2.5723 trillion KRW), and remodeling of aging public rental housing (276 billion KRW) were reduced; all of these funds are aimed at stabilizing housing for low-income and working-class citizens.

Additionally, budgets for multi-family purchase rental borrowers (507.4 billion KRW), national rental borrowers (120.9 billion KRW), permanent rental borrowers (126.7 billion KRW), and Happy Housing investments (410.7 billion KRW), which were progressing various projects through the REITs method to continuously supply rental housing, were also cut.

Regarding this, the Ministry of Land explained to the National Assembly that the budget was reduced by switching the direct loan method of housing purchase and jeonse fund loan projects to a secondary compensation method, where citizens obtain loans from private financial institutions at market interest rates, and the government compensates the difference in interest costs between policy loans and private financial institution loans.

However, since a significant portion of the reduced budget was for projects targeting financially vulnerable groups, if these are transferred to private finance, institutional supplements such as screening issues are expected to be necessary.