[Real Estate AtoZ] Allowing Conversion of Subscription Savings to Comprehensive Savings... More Subscription Opportunities but Likely Higher Competition Rates

Subscription Savings Account Conversion to Comprehensive Savings Allowed
Comprehensive Savings Eligible for Public and Private Apartment Subscription
All Types Eligible for Subscription, Competition Rate Increases

A notice for the Comprehensive Housing Subscription Savings attached to a bank in downtown Seoul. [Photo by Sajinulcheo, Yonhap News]

Starting from the 1st of next month, subscribers of the Housing Subscription Savings and Housing Subscription Installment Savings will be able to switch to the Housing Subscription Comprehensive Savings (hereafter ‘Comprehensive Savings’). With just one Comprehensive Savings account, applicants can apply for all types of apartments, whether public or private. As subscription opportunities increase for subscribers, the competition rate for housing applications is likely to rise further.

Switching to Comprehensive Savings Allowed... More Housing Application Opportunities

The Ministry of Land, Infrastructure and Transport announced on the 25th that from the 1st of next month, switching from Housing Subscription Savings and Housing Subscription Installment Savings to Comprehensive Savings will be permitted. Previously, when subscribers of Housing Subscription Savings or Installment Savings canceled their accounts to join Comprehensive Savings, their payment periods were not recognized, causing dissatisfaction among subscribers. However, from now on, even if they switch to Comprehensive Savings, their payment periods will be fully recognized.

This system improvement will increase housing application opportunities. Originally, Housing Subscription Savings subscribers could only apply for public apartments with exclusive areas of 85㎡ or less, and Installment Savings subscribers could only apply for private apartments. But once they become Comprehensive Savings subscribers, they can apply for all types. For example, a Housing Subscription Savings subscriber who could only apply for public apartments can apply for both public and private apartments after switching to Comprehensive Savings. To encourage account switching, the Ministry raised the Comprehensive Savings interest rates on the 23rd (from 2.0%~2.8% to 2.3%~3.1%).

"As Housing Application Opportunities Increase, Competition Intensifies"

As housing application opportunities increase, the competition rate is also likely to become fiercer. Kim Hyoseon, Senior Real Estate Specialist at NH Nonghyup Bank, said, "Except for subscribers who have tailored their conditions to favor one type, most will switch to Comprehensive Savings through this system improvement." He especially noted, "The 0.3 percentage point increase in Comprehensive Savings interest rates will also serve as an incentive."

Kwon Youngsun, Team Leader of the Real Estate Investment Advisory Center at Shinhan Bank, said, "Subscribers who were previously divided between public apartment and private apartment accounts can now apply regardless of type, so competition rates will increase. However, since the competition rate in the housing market is already very high and many subscribers are canceling their accounts, the number of Comprehensive Savings subscribers may not increase significantly."

According to the Korea Real Estate Board’s Subscription Home, the number of Comprehensive Savings subscribers last month was 25,457,228, a decrease of 32,635 from the previous month (25,489,863) due to account cancellations. This downward trend in subscriber numbers continues.