"Stop 'Panic Buying' in Their 30s"... Large-Scale Launch of 'Equity Accumulation Type Sale' at Taereung and More

Separate Eligibility Criteria Based on Income and Assets Targeting 30s Who 'Give Up Subscription'
"Prefer Sale Over Rent... Finalizing to Reduce 'Homeownership Urgency'"

Photo by Mun Ho-nam munonam@

[Asia Economy Reporter Kim Yuri] 'Equity purchase-type' apartments, where buyers can pay the purchase price in installments over up to 30 years, will be supplied in new public housing sites in Seoul, including the Taereung Golf Course area. In particular, these apartments will have differentiated eligibility criteria from existing public sale apartments, including separate income and asset standards to expand the chances of winning for younger generations.

According to the government and Seoul city on the 29th, the Housing Supply Expansion Task Force (TF) has concretized this plan through meetings. This proposal was originally suggested by Seoul city to the TF, and the decision to introduce the system was made based on the judgment that it would be effective in calming the 'panic buying' among young people.

Equity accumulation-type public housing applies a method where residents live on an 8-year lease, then pay 40% of the sale price to convert to ownership, and the remaining 60% is paid in installments over 20 or 30 years. At the time of sale conversion, 60% of the equity is initially held by the supplier, either Korea Land & Housing Corporation (LH) or Seoul Housing & Communities Corporation (SH), and the contract holder gradually increases their equity proportionally to the amount of purchase payments made. However, instead of the lease-then-sale conversion method, options such as supplying the housing as a sale from the start with a mandatory residence period through amendments to the Housing Act are also being considered.

The TF explained that equity purchase-type housing is tailored for young homebuyers as it requires less initial capital burden compared to existing homes that require full payment at the time of sale conversion. The details regarding profits when selling the house mid-term are still being finalized. The likely method is to divide profits according to the equity ratio at the time of sale.

To this end, the TF is considering reducing the proportion of public rental housing and allocating more to equity purchase-type sales. This is based on the judgment that increasing the proportion of sale housing rather than rental housing is more effective in alleviating the anxiety of young people amid continuously rising housing prices. A TF official said, "We are preparing measures to calm the psychology of young people rushing into the existing sales market out of anxiety," adding, "We are focusing more on expanding the supply of sale housing than rental housing."

The main supply sites include large-scale areas within Seoul such as Taereung Golf Course and Yongsan Maintenance Depot, but high-density urban development areas are also included. In addition to Seoul, the TF is also reviewing the allocation of some equity accumulation-type apartments to additional supply volumes in the 3rd New Towns in Incheon and Gyeonggi areas.

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