Reducing Housing Cost Burden for Youth... Expanding First-Time Special Supply, Raising Loan Limits

Joint Announcement of Economic Policy Directions for the Second Half of the Year by Related Ministries
Increase of Youth Housing Purchase Loan Limit to 50 Million Won
Annual Increase to 7,000 Units in Private Housing First-Time Special Supply
Extension of Jeonse and Wolse Support Programs... Expansion of Monthly Rent Support

View of apartments in Nowon-gu from Bukhansan Mountain in Seoul [Image source=Yonhap News]

[Asia Economy Reporter Moon Jiwon] The government has prepared measures to reduce the housing cost burden for young people by increasing the lifetime first-time special supply volume by 7,000 units annually and raising the housing purchase loan limit by 50 million KRW.

On the 28th, the government announced the '2021 Second Half Economic Policy Direction' jointly with related ministries. This policy includes key tasks for the second half aimed at restoring the stable housing environment and homeownership hopes of the youth generation, such as support for youth jeonse and monthly rent, housing purchase fund support, expansion of lifetime first-time special supply, and early supply of quality housing in urban areas.

Youth and Newlywed Housing Purchase Loan Limit Raised by 50 Million KRW

First, the government decided to extend the operation period of the current jeonse and monthly rent support system, which aims to reduce the burden of youth jeonse and monthly rent, and expand its benefits.

The operation period of the jeonse deposit loan for young workers in small and medium enterprises, originally scheduled to end this year, will be extended until 2023. To protect tenants' jeonse deposits and reduce guarantee fee burdens, the HUG's jeonse deposit return guarantee fee discount of 70-80% will also be extended from the end of this month to the end of this year.

For low-income, homeless youth, monthly rent funds will be supported interest-free up to 200,000 KRW per month to drastically reduce the existing monthly rent burden, and the monthly rent loan limit will also be raised. The current loan limit is 400,000 KRW per month (interest rate 1.0%), but this will be increased to 500,000 KRW, with loans under 200,000 KRW at 0% interest.

To enable young people to purchase homes with less initial capital, the housing purchase loan limit will be raised by 50 million KRW. Accordingly, the loan limit will increase to 250 million to 310 million KRW (27 million KRW for newlyweds, 31 million KRW for families with two or more children).

To support jeonse deposits for low-income and genuine demanders, the jeonse deposit standard for using HUG's safe jeonse loan (guarantee) will be raised by 200 million KRW to 700 million KRW in the metropolitan area, and by 100 million KRW to 500 million KRW in other regions. However, the maximum loan guarantee limits will remain at 400 million KRW in the metropolitan area and 320 million KRW in other regions.

Preferential benefits for youth subscription savings accounts will also be extended from the end of this year to the end of 2023. The income eligibility will be relaxed from an annual income of 30 million KRW to 36 million KRW, allowing more young people to receive housing financial support.

Citizens visiting Namsan in Seoul looking at the Gangnam area of Seoul [Image source=Yonhap News]

Expansion of Lifetime First-Time Special Supply... Accelerating 3rd New Town Pre-Subscription

In particular, the proportion of lifetime first-time special supply for private housing will be increased by 7,000 units annually, increasing homeownership opportunities for 2030 homeless genuine demanders. The proportion of lifetime first-time special supply for private housing will increase by 5 percentage points from 15% to 20% for public land and by 3 percentage points from 7% to 10% for private land.

The government will start a pilot project this year for 'Anyone House,' which allows tenants to live at low cost and then convert to homeownership. Through equity accumulation housing, where residents pay the house price in long-term installments over 20 to 30 years of residence and acquire equity, the government aims to reduce the housing cost burden for young people.

Additionally, the government will accelerate the housing supply plans announced in the 2·4 measures and the 3rd New Town pre-subscription. The designation of new land sites totaling 130,000 units, which was postponed from the first half, will be announced sequentially from the end of August after swiftly completing speculative investigations. Pre-subscription for the 3rd New Town, which is of high interest to the youth generation, will supply 62,000 units as scheduled by 2022.

Furthermore, about 5,000 jeonse rental houses will be additionally supplied in university areas and station areas where many young people reside, and newly built purchase agreements and public jeonse, promoted as part of last year's jeonse measures, will secure and supply 38,000 units by the second half as originally planned.

The government stated, "the recent housing market is in a situation of persistent instability due to unprecedented ultra-low interest rates, abundant market liquidity, and expectations of various deregulations," and emphasized, "we will strictly monitor the current housing market situation and promptly prepare necessary measures for housing market stabilization in the second half in cooperation with related ministries and local governments."

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