Is Owning a House Worth Over 900 Million Won a Crime?... Housing Pension Price Standard Relaxation Becomes Empty Promise Again (Comprehensive)

Ahead of the End of the 20th National Assembly, Steps Taken to Scrap the Amendment to the Korea Housing Finance Corporation Act
Failed to Change Housing Price from Market Price 900 Million KRW to Official Price 900 Million KRW or Less... Expansion to Residential Officetels Also Unlikely
What About Elderly 'House Poor' with Only One Home?

[Asia Economy Reporter Kwon Haeyoung] The plan to expand the housing pension, a national retirement preparation tool, to include properties with a publicly announced price of 900 million KRW or less and residential officetels has effectively been shelved as the 20th National Assembly nears its end. Some elderly retirees, who have no income or assets except for a single home, remain in a 'house poor' situation, forced to save on living expenses due to insufficient retirement funds.

According to the financial sector on the 19th, the amendment to the Korea Housing Finance Corporation Act (Housing Finance Act), currently pending in the bill review subcommittee ahead of the 20th National Assembly's conclusion on the 29th, is expected to be automatically discarded. The National Assembly repeatedly faced disruptions at the end of last year, and the Financial Services Commission, the relevant ministry, prioritized passing the Credit Information Act and the Financial Consumer Protection Act, pushing the Housing Finance Act amendment to the back burner.

A Financial Services Commission official said, "With the 20th National Assembly session nearing its end, it is difficult to amend the Housing Finance Act," adding, "We plan to re-pursue the amendment based on the previously announced housing pension activation plan in the next session."

The core of the Housing Finance Act amendment was to change the housing price eligibility for joining the housing pension (currently 900 million KRW or less) from market price to publicly announced price. The Financial Services Commission announced early last year in its work plan its intention to raise the housing price ceiling and released a housing pension activation plan including this content in November.

While the standard for high-priced homes has lowered due to rising housing prices, the 9 billion KRW market price ceiling has been applied for 11 years since 2008, excluding some elderly from eligibility for the housing pension. Both ruling and opposition lawmakers, including Choi Jaesung of the Democratic Party and Kang Hyosang of the United Future Party, proposed bills to abolish the housing price ceiling more strongly than the government plan, and it was expected that there would be little opposition if the bill passed, but it was only submitted to the Judiciary Committee.

Efforts to expand eligibility for the housing pension to include residential officetels and single- or multi-family houses rented out under lease agreements also failed to produce results. The Financial Services Commission also announced plans to propose an amendment allowing spouses to automatically inherit the pension upon the death of the housing pension subscriber, but there has been no progress. Currently, the spouse can inherit the housing pension only with the consent of the children.

The only achievement by the Financial Services Commission last year was lowering the minimum age for housing pension enrollment from 60 to 55 years old. This was possible solely through an amendment to the enforcement decree of the Housing Finance Act, which the Financial Services Commission has authority over, and did not require National Assembly approval. The Financial Services Commission estimated that about 1.15 million additional households could join the housing pension due to the lowered enrollment age.

However, with the key measure of relaxing the housing price limit for housing pension activation stalled, elderly people who own a single home valued over 900 million KRW at market price are expected to continue living as house poor until eligibility is eased.

Nonetheless, as the median price of apartments in Seoul has surpassed 900 million KRW, there is ongoing criticism that maintaining the housing price limit at 900 million KRW market price, due to concerns over the 'wealthy controversy,' is unrealistic. Korea's proportion of non-financial assets, including real estate, among total assets is 74.4%, higher than other countries such as the U.S. (30.5%), Japan (37.8%), and the U.K. (47.2%), highlighting the need to activate the housing pension. Currently, for a 60-year-old owning a 900 million KRW home, the maximum monthly housing pension is 1.87 million KRW, which significantly aids retirement life. The higher the home price, the lower the risk of loss, resulting in less impact on national finances.

Meanwhile, according to the Korea Housing Finance Corporation, the number of new housing pension subscribers last year was 10,982, bringing the total number of subscribers to 71,034. As of the end of last year, the average age of housing pension subscribers was 72, the average home price was 297 million KRW, and the average monthly pension amount was 1.01 million KRW.

This content was produced with the assistance of AI translation services.