Necessity for Developing Financial Products for Equity Sharing Housing 'Emerges'

Unfamiliar Concept of Shared Equity Housing
Difficulty in Designing Financial Products for Commercial Banks
Need to Open the Way by Developing Public Guarantee Products

[Asia Economy Reporter Park Sun-mi] As the government and Seoul City newly announced plans to pilot equity accumulation-type sale housing for the 30s and 40s generation in the '8.4 Housing Supply Plan,' voices are emerging calling for the development of financial products to revitalize equity-sharing housing.

According to the financial sector on the 28th, commercial banks have yet to prepare financial products related to equity-sharing housing. Since the concept of equity-sharing housing is still unfamiliar and there are few cases of application, banks have not been able to design financial products targeting this type. Accordingly, there is a movement that financial public enterprises should take the lead in developing public guarantee financial products that can activate equity-sharing housing. This is also why the Housing Finance Research Institute under the Korea Housing Finance Corporation recently published a report titled 'A New Approach to Housing Ownership, Equity Sharing,' mentioning the advantages of introducing equity-sharing housing and the need to develop financial products for its activation.

Kwon Oh-hoon, head of the Housing Finance Research Institute, explained, "Since equity-sharing housing is such an unfamiliar concept in Korea, it will take time for banks to release related loan products. It is necessary to open the way by first developing public guarantee products through discussions with banks. Currently, only the necessity of developing public guarantee products has been raised, and follow-up measures to establish direction and design products should follow."

Due to the relative deprivation of non-homeowning households caused by the overheated housing market and the continuous increase in housing ownership awareness resulting from the spread of social anxiety, the need for 'introduction and activation of equity-sharing housing' to create a housing purchase environment and expand the diversity of housing occupancy types is emerging. Equity-sharing housing has an intermediate nature between public rental and owner-occupancy. It has the advantage of being used as a means of mixed housing occupancy types and community-integrated urban development when developing underdeveloped areas. It also provides stability and continuity of residence compared to traditional homeownership.

Many countries, including the United States and the United Kingdom, actively utilize equity-sharing policies as a way to resolve housing adequacy issues and enhance diversity in housing choices, but Korea is still in the early stages of application. Korea's equity-sharing housing was introduced in the form of installment rental housing in 2008 and land lease sale housing in 2011, with pilot projects conducted, but it was pointed out that fundamentally it was a variant of rental housing where the benefits of homeownership belong to the public.

The Housing Finance Research Institute advised in the report, "For the successful introduction of equity-sharing housing, it is necessary to secure flexibility by selecting the target as 'first-time homebuyers' rather than limiting the application to youth households, newlyweds, or by age and income," and "consideration is also needed for methods applicable to purchasing existing homes as well as new sales."

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