Seoul Says "Loan Curbs Raise Funding Burden for Young People and Newlyweds by Up to 100 Million Won"

"Low Asset Levels Among End-Users Delay Entry into Homeownership"

View of apartment buildings in Seoul. Yonhap News Agency

The Seoul Metropolitan Government has released an analysis showing that, due to the central government's loan regulations, young households now face an additional funding burden of an average of 60 million won, and newlywed couples an additional 100 million won, to purchase their own home.

The city announced on the 22nd that it had used the "2024 Seoul Housing Survey" to analyze the impact of real estate loan regulations on end-user households without homes that require housing stability, and released the results. Focusing on 2.16 million households without homes, the city identified the "number of households capable of purchasing a home" by examining the asset holdings of 1.65 million end-user, non-homeowning households who responded that "they need to purchase their own home," and by comparing the amount they can borrow against the average apartment sale price.

The average annual income of end-user households without homes in Seoul was calculated at 42.26 million won, and their average assets at 180 million won. For young end-user households, the average annual income was 40.62 million won and average assets were about 150 million won, while newlywed end-user households showed an average annual income of 64.93 million won and average assets of 330 million won.

The survey found that the government's loan regulations have made it even more difficult for end-user, non-homeowning households to raise funds. Compared with the period before the June 27 measures last year, the average amount they can borrow has fallen by 60 million won for young households and by 100 million won for newlywed couples.

The city noted that the reduced loan amounts correspond to about 40% of the average assets of young end-user, non-homeowning households (150 million won) and about 30% of the average assets of newlywed end-user, non-homeowning households (330 million won), and therefore may act as a threshold determining whether they can purchase a home, by forcing them to secure additional funds.

Among households planning to move within the next five years, 47.1% said they hoped to move into an apartment. However, the average desired apartment sale price ranged by region from 860 million won to 2.08 billion won, showing a large gap from what they can actually afford.

The city added that, because the asset levels of end-users are low compared with the average sale price in Seoul of 1.23 billion won, they have no other choice but to consider relocating to other areas or to continue living in rental housing, which may delay the timing of when they can first enter homeownership.

Among non-homeowning households in Seoul, 1.65 million households, or 76%, feel that "they need to purchase their own home." Of these, young end-user households accounted for 890,000, and newlywed end-user households for 210,000. Among end-user, non-homeowning households, 88.0% of young people and 86.6% of newlyweds responded that purchasing a home is necessary for the purpose of stable, owner-occupied residence.

Jung Jongdae, head of the Seoul Real Estate Policy Development Center, said, "Through this analysis, which examined changes in the ability to raise funds for home purchases in light of the recent government loan regulations, we confirmed that additional support, such as credit enhancement, is needed to expand home-buying opportunities for young people and newlyweds who are seeking homes for their own occupancy." He added, "For renter households, a multilayered response will be needed, including strengthening the foundation for stable residence through the supply of both private and public rental housing."