Shared Equity Housing for the Homeless... Financial Product Development Must Begin for Activation (Comprehensive)

"Need to Open the Way by Developing Publicly Guaranteed Financial Products"

[Asia Economy Reporter Sunmi Park] As the government and Seoul City newly announced a pilot plan for equity accumulation-type sale housing for the 30s and 40s generation in the '8.4 Housing Supply Plan,' voices are emerging that financial product development is necessary to revitalize equity-sharing housing.

According to the financial sector on the 28th, commercial banks have not yet prepared financial products related to equity-sharing housing. Since the concept of equity-sharing housing is still unfamiliar and there are few application cases, banks have not been able to design financial products targeting this. 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.

The Housing Finance Research Institute under the Korea Housing Finance Corporation recently published a report titled 'A New Approach to Housing Ownership, Equity Sharing,' which mentions 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 create direction and design products should follow."

Activation of Equity-Sharing Housing Helps Solve Housing Problems
"Financial Product Development Must Support Activation"

Due to the relative deprivation of households without housing caused by the overheated housing market and the continuous increase in housing ownership awareness due to the spread of social anxiety, the necessity of 'introducing and activating 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 use equity-sharing policies as a way to resolve housing adequacy issues and enhance diversity of housing choices, but Korea is 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, and pilot projects were conducted, but it was pointed out that essentially it was a modified form of rental housing where the benefits of homeownership belong to the public.

Recently, the government and Seoul City newly announced a pilot plan for equity accumulation-type sale housing for the 30s and 40s generation in the '8.4 Housing Supply Plan.' It is a structure that shares equity with Seoul City. For households with income below 130% of the median income (140% for dual-income households), they can secure only 20-40% equity in housing priced about 30% cheaper than the surrounding market price at the time of sale and gradually acquire 100% equity over 20 to 30 years.

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 "It is also necessary to consider methods applicable when purchasing existing homes as well as new sales."

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