Dramatic Benefits for Childbirth Households... What Is the 'Newborn Special Supply'? [Real Estate A to Z]

The government is drawing market attention by deciding to establish a special public housing supply (special supply) for households with newborns starting from March next year. A ‘Newborn Special Loan’ offering ultra-low interest rates for home purchases by childbirth households will also be introduced in January next year. The policy aims to address the low birthrate issue by providing direct benefits for childbirth itself.

What Exactly Is the Newborn Special Supply?

The special supply system allocates housing to socially vulnerable groups requiring policy consideration, such as newlyweds, multi-child families, and national merit recipients. With the establishment of the ‘Newborn Special Supply,’ households will qualify regardless of marital status if they have a child. Applicants must have conceived or given birth within two years from the announcement date of the resident recruitment and meet certain income and asset requirements. Household income must be 150% or less of the average monthly urban worker income (975 million KRW or less for households of three or fewer this year), and assets must be below 379 million KRW. The government’s goal is to supply 30,000 households annually through the newborn special supply starting next year.

Benefits for childbirth households will expand not only to public housing but also to private housing. In private sales, a ‘Newborn Priority Supply’ will be implemented. This means that 20% of the annual lifetime first-time and newlywed special supply quotas will be allocated first to childbearing households without homeownership. The plan is to supply 10,000 households annually through this measure. Proof of pregnancy or childbirth within two years from the resident recruitment announcement date is required to qualify for priority supply. The income requirement is 160% of the average monthly urban worker income (10.4 million KRW or less for households of three or fewer).

How Is This Different from Existing Systems?

Until now, households with one child were often at a disadvantage when applying for housing. In the newlywed special supply, which favors families with more children, households with one child found it harder to win compared to those with two children. The lifetime first-time special supply selects winners by lottery, making competition fiercer. However, with the establishment of the newborn special supply, households with one child can now have a better chance of securing their own home.

The income criteria for the newborn special supply have also been significantly relaxed. Previously, to qualify for priority supply under the newlywed special supply, income had to be 100% or less (120% for dual-income households). But for the public housing newborn special supply, income must not exceed 150% of the average monthly urban worker income, and for private housing priority supply, 160%. Applying this year’s figures, this means 9.75 million KRW or less for public housing and 10.4 million KRW or less for private housing for a three-person household. Even dual-income couples with higher incomes can expect to win the special supply as long as they have children.

Introduction of the ‘Newborn Special Loan’ with Relaxed Income Requirements

Loan support for childbirth households has also been prepared. In January next year, a ‘Newborn Special’ loan product with significantly relaxed income criteria will be launched. Eligible applicants are non-homeowning households that have given birth within two years from the loan application date, applicable to children born this year onward. The annual income limit is 130 million KRW or less (combined for couples), a significant relaxation compared to the 85 million KRW limit for newlywed and lifetime first-time loans. The special interest rates, ranging from 1.6% to 3.3% depending on income, will apply for five years. If the borrower has more children after receiving the special loan, the loan interest rate will be further reduced by 0.2 percentage points per child, and the special interest rate period will be extended by an additional five years. The maximum housing purchase price will be raised from 600 million KRW to 900 million KRW, and the loan limit will increase from 400 million KRW to 500 million KRW.