"Even If They Want to Sell, They Can't"... Temporary Two-Home Owners Suffer Financial Strain

September Seoul Apartment Sales Volume

Plummeted 75% to Only 856 Cases

If the Disposal Deadline for Existing Homes is Missed

Mortgage Loans Will Be Recalled

[Asia Economy Reporter Kim Min-young] Yeonho Kim, who moved to Gwangmyeong, Gyeonggi Province for his children's education, is growing increasingly anxious as his existing home in Songdo, Incheon, remains unsold. Despite deciding to move to Gwangmyeong and putting his Songdo apartment on the market at a price below the market value for a quick sale, not a single person has come to view the house, nor has he received any inquiry calls. Kim, who took out a mortgage loan on the condition of disposing of his existing home, now has only two months left before the loan recall period. He said, "I had hoped that Gwangmyeong City would be removed from the regulation zone this time, but it was ultimately excluded, so I must sell the house within two months." He added, "Even though I want to sell, it won't sell, and I am worried that I might be forced into a sale, which is making me feel drained day by day."

Temporary two-home owners who planned to buy first and sell later are struggling to dispose of their existing homes amid an unprecedented transaction freeze. Due to high interest rates and an economic downturn, the transaction cliff is deepening, and demand has completely vanished.

According to the Ministry of Land, Infrastructure and Transport's housing sales transaction volume on the 15th, nationwide housing sales in September were 32,403 cases, down 8.8% from the previous month and plummeting 60.3% compared to a year ago. Seoul apartment transactions are at an all-time low. According to the Ministry, Seoul apartment sales in September were only 856 cases, a sharp drop of 77.9%. This is the lowest since related statistics began in January 2006. The record low was broken for two consecutive months following August (907 cases).

The sales performance in Incheon, which had the highest house price increase rate last year, is equally severe. In September, Incheon's housing transaction volume was 2,292 cases, down 6.3% from August and plunging 66.7% compared to a year ago.

In a situation where transactions are virtually nonexistent, temporary two-home owners who must sell their homes are growing increasingly distressed. Since its inauguration, the Yoon Suk-yeol administration extended the disposal deadline for existing homes of temporary two-home owners from six months to two years. Although it announced retroactive application from the government's inauguration date of May 10, the Financial Services Commission revised the loan regulations late, making the implementation date August 1. According to the previous banking supervision regulations, if the six-month period is exceeded, the mortgage loan taken out when purchasing the home is recalled, and no mortgage loans can be obtained for the next three years.

The problem is the relentless interest rate hikes. The rapid pace of rate increases has sharply contracted real estate demand, making it increasingly difficult to sell homes. Kim, a woman in her 40s who gave birth late and is currently raising children, also listed her apartment in Seoul at 19 places but failed to sell it. She took out a mortgage loan from a secondary financial institution to prepare for an apartment in another area, but since she received it in May, she is subject to the previous regulations and must sell her Seoul apartment by this month. She lamented, "With the ongoing real estate transaction cliff, there are quite a few people who cannot dispose of their existing homes and are at risk of foreclosure."

Homeowners like Kim are demanding relief measures reflecting the difficulty of sales regardless of their will, but the government maintains that it is difficult as it would be unfair to those who have already sold their homes.

Seo Jin-hyung, co-representative of the Apartment Forum and professor of MD Product Planning Business at Gyeongin Women's University, said, "Applying the extension of the disposal deadline retroactively without criteria could undermine the consistency of government policies and raise fairness issues. However, to minimize the damage to temporary two-home owners, relief measures such as treating homeowners who have entrusted their unsellable properties to sales trusts as having sold them and extending the disposal deadline could be considered."