Why is everyone buying houses... 2030s invest in stocks, 4050s sell houses

Real Estate Financing Plan Funding Methods Disclosed
Decrease in Gap Investments and Increase in Yeonggeul Investors

A survey revealed that among this year's homebuyers, those in their 20s and 30s raised funds by selling stocks, while those in their 40s and 50s did so by disposing of existing homes. Gap investment, which involves covering the house price by receiving jeonse deposits, has relatively decreased, while the number of 'Yeongkkeuljok'?people who even sell stocks to buy houses?has increased.

According to the 'Classification by Funding Method in Housing Fund Procurement Plans' submitted by the Ministry of Land, Infrastructure and Transport to Rep. Lee Yeon-hee of the Democratic Party on the 14th, among 80,969 people who submitted housing fund procurement plans up to August this year (based on contract date), 57.9% reported that they would raise funds through 'real estate disposal proceeds.' This ratio significantly increased from 27.0% in 2022 to 55.5% last year and continues to rise this year. Looking at cases of funding through 'upgrading to a higher-priced area' by leveraging the rising house prices by age group, 65.4% were aged 40 and above, 57.0% in their 50s, and 51.8% in their 30s.

The proportion reporting funds raised through 'sale of stocks and bonds' was only 4% in 2022 but surged to 6.3% last year and 13.8% from January to August this year. Especially, among those in their 20s and 30s who sold stocks to buy homes, the ratio nearly tripled from 5.9% in 2022 to 17.0% over two years. The ratio also increased from 3.4% to 12.9% among those in their 40s and 50s.

The proportion of homebuyers reporting financial institution loans as the source of funds rose from 44.1% last year to 68.7% from January to August this year. Notably, high-value loans exceeding 500 million KRW reached 7,874 cases by July this year, a 145.7% increase compared to 3,205 cases recorded throughout 2021. High-value loans over 500 million KRW accounted for 8.1% of all reported cases in 2021 but surged to 38.5% this year. While high-value loan transactions were less than one in ten cases in 2021, they rose to about four in ten this year. By age group, 44.7% of high-value loans over 500 million KRW were taken by people in their 20s and 30s, the highest proportion, with those in their 40s accounting for 39.8%. Approximately nine out of ten high-value loan transactions were by young adults.

On the other hand, the proportion of gap investment decreased. The percentage of those reporting that they would purchase homes by directly succeeding the jeonse deposit was 36.8%, maintaining the downward trend from 44.6% in 2022 to 35.8% last year.

View of downtown apartment complexes from Namsan, Seoul Photo by Yonhap News

The Ministry of Land, Infrastructure and Transport requires submission of housing fund procurement plans when the transaction amount exceeds 600 million KRW or when purchasing homes located in speculative overheated districts (Gangnam, Seocho, Songpa, Yongsan districts). In Seoul, the average actual transaction price of apartments surpassed 1.1 billion KRW this year, meaning that in almost all transactions, submission of housing fund procurement plans is mandatory.