Concerns Over 'Yeongkkeul Last Train' for 30s Apartment Buyers... Interest Rate Hike Trigger This Year

Over 1,400 Apartment Purchases in April by Age Group
Rapid Debt Increase Among 2030s... Most Housing Funds Borrowed

The top capital gains tax rate on housing will be increased to 75% starting from the 1st of next month. The taxpayers subject to property tax and comprehensive real estate tax will also be finalized as of that date. However, the property tax rate has not been finalized due to the legislative amendment process, and the comprehensive real estate tax rate is still under further discussion. The photo shows the view of apartments in the Gangnam area from the Lotte World Tower Sky Observatory in Songpa-gu, Seoul. Photo by Yoon Dong-joo doso7@

Despite a significant decline in apartment transactions in Seoul, people in their 30s remain the most active buyers of apartments. With the possibility of interest rate hikes this year, concerns are rising that those in their 30s could become a flashpoint for household debt issues in the future.

According to the monthly apartment transaction status from the Korea Real Estate Board on the 30th, the number of apartment sales in Seoul last month (based on the reporting date) was 4,194.

By age group, those in their 30s accounted for the largest number with 1,430 transactions, followed by those in their 40s (1,078), 50s (689), 60s (396), 70 and above (239), and 20s and below (217).

Transactions by people in their 30s accounted for 34.1% of the total. Adding transactions by those aged 20 and below (5.2%) raises the share of those aged 30 and below to 39.3%.

The share of transactions by those in their 30s reached a record high of 39.6% in January this year since the Korea Real Estate Board began publishing age-specific statistics in 2019, and has since remained between 34% and 36% with 35.9% in February, 36.1% in March, and 34.1% in April.

Expanding the range to those aged 30 and below, their transaction share first rose above 40% in August last year at 40.4%, peaked at 44.7% in January this year, and has since maintained around 40% with 40.1% in February, 40.6% in March, and 39.3% in April.

The top capital gains tax rate on housing will be increased to 75% starting from the 1st of next month. The taxpayers subject to property tax and comprehensive real estate tax will also be finalized as of that date. However, the property tax rate has not been finalized due to the legislative amendment process, and the comprehensive real estate tax rate is still under further discussion. The photo shows the view of apartments in the Gangnam area from the Lotte World Tower Sky Observatory in Songpa-gu, Seoul. Photo by Dongju Yoon doso7@

Meanwhile, the Bank of Korea mentioned the possibility of an interest rate hike within the year for the first time on the 27th, raising concerns about the 'young adults going all-in' in their 30s.

In fact, even before the base interest rate hike, bond yields?which serve as an indicator for loan interest rates?are likely to rise in advance, which would significantly increase the interest households have to repay.

According to data submitted by the Bank of Korea to Yoon Doo-hyun, a member of the National Assembly's Political Affairs Committee from the People Power Party, when personal loan interest rates (including mortgage and credit loans) rise by 1 percentage point, household loan interest increases by a total of 11.8 trillion won. This estimate is based on an analysis assuming about 72% of household loans (financial liabilities) by income quintile are variable-rate loans.

The increase in interest by income quintile is ▲1st quintile 500 billion won ▲2nd quintile 1.1 trillion won ▲3rd quintile 2 trillion won ▲4th quintile 3 trillion won ▲5th quintile 5.2 trillion won, meaning that excluding the high-income 5th quintile, low- and middle-income groups would face an additional interest burden of 6.6 trillion won.

According to a recent report titled "Post-COVID-19 Youth Debt Status and Implications" published by Baek Jong-ho, a research fellow at Hana Financial Management Research Institute, the debt per capita of young people in their 20s and 30s has risen sharply compared to other age groups since COVID-19.

Looking at the increase in LTI (loan-to-income ratio) by age group, those aged 20 and below rose by 23.8 percentage points (p) compared to the previous year, and those in their 30s rose by 23.9 p. This contrasts with increases of 13.3 p for those in their 40s and 6 p for those in their 50s.

Examining the proportion of new borrowers by age group as of September last year, those aged 30 and below accounted for 55.3% of new borrowers, dominating all age groups.

As of the third quarter of last year, the loan amount for young people was about 409 trillion won, of which 64% was accounted for by mortgage loans (173 trillion won) and jeonse deposit loans (88 trillion won).

Researcher Baek suggested, "The recently announced phased application of the Debt Service Ratio (DSR) by borrower is expected to stabilize some household debt by blocking speculative demand," but added, "For low-income youth and those new to society, despite supplementary measures in DSR calculation, reduced financial accessibility is inevitable, so systematic support measures are necessary."

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