Kim Du-gwan: Rental Business Operators Snatched Up 4 Out of 10 Small Houses

Kim Du-kwan, member of the Democratic Party of Korea.

[Asia Economy Yeongnam Reporting Headquarters Reporter Lee Sang-hyun] Representative Kim Du-gwan (Gyeongnam Yangsan-eul) claimed that the cause of the skyrocketing real estate prices is the purchase of small housing units (40㎡ or less, 12.1 pyeong) by housing rental business operators.

He explained that the supply of small housing units on the market has dried up, forcing actual buyers to purchase medium or larger homes.

On the 23rd, Representative Kim stated, “The prices of small housing units, of which housing rental business operators own four out of every ten units, are soaring, and these units hardly appear on the sales market. This situation forces actual buyers to look for homes larger than small housing units, which is one of the key reasons for the surge in apartment prices.”

He added, “As long as various tax benefits for housing rental business operators, such as exemption from comprehensive real estate tax (종부세) aggregation for rental housing, are maintained, the 'pick-up phenomenon' of small housing units by housing rental business operators and the surge in apartment prices cannot be stopped. Stabilizing housing prices should come before discussing easing the comprehensive real estate tax, and the first task is to revise the benefits for housing rental business operators.”

According to data submitted to Representative Kim by the Ministry of Land, Infrastructure and Transport and the National Tax Service, the number of small housing units in Korea nearly doubled from 1.27 million units in 2010 to 2.36 million units in 2019.

Among them, 880,000 units (37.3%) are owned by housing rental business operators. As the supply of small housing units increased, the purchase rate of small housing units by housing rental business operators also rose. While the number of small housing units increased by 67,000 units from 2.293 million in 2018 to 2.36 million in 2019, private rental housing increased by 89,000 units during the same period.

Regarding this, Representative Kim pointed out, “The purchases by housing rental business operators exceeded the supply of housing units.”

He continued, “As the proportion of small housing units owned by housing rental business operators increased, the prices of apartments of the same size also soared. Due to ownership by housing rental business operators, small housing units are even experiencing a shortage in supply.”

He cited examples such as a 32㎡ (9.68 pyeong) apartment in Gonghang-dong, Gangseo-gu, Seoul, which was worth 200 million KRW in November 2020 and is now priced at 380 million KRW, and a 36㎡ (10.89 pyeong) apartment in Bukgajwa-dong, Seodaemun-gu, Seoul, which was worth 280 million KRW in 2019 and is now trading at 370 million KRW.

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