"To My Son and Daughter, I'm Truly Sorry" Soaring House Prices and Blocked 'Yeongkkeul' Loans... Common People Sigh

Mortgage Restrictions for Homeless People Effectively Block 'Yeongkkeul' Home Purchase
Worried About Rising Housing Prices Every Day
"Villas in Seoul and Gyeonggi Area Also Rising" Sigh
Expert: "Apartment Prices in the Capital Area Are Rising... Outskirts Apartment Prices Will Continue to Increase"

Low-income residents express feelings of deprivation amid the soaring housing prices in Seoul.
[Image source=Yonhap News]

[Asia Economy Reporter Han Seung-gon] "As someone without a home, I really feel suffocated."

As housing prices continue to rise day after day, more and more ordinary people are complaining of various stresses. Recently, a post titled "Had another fight with my wife because of real estate" was uploaded on a community site. The author lamented, "I am a middle-aged person who was scolded like crazy until 2 a.m. yesterday for not buying a house five years ago when I suggested it, and couldn't sleep until 6 a.m. due to stress."

Meanwhile, there are parents who feel sorry for their children who are struggling hard to buy their own homes. Kim, a mid-50s office worker living in the Gyeonggi area, confessed, "Honestly, I don't know what to say to my son and daughter."

He expressed frustration, saying, "My children are desperately earning money, hardly spending it, and putting money into subscription savings, but every day when I wake up, housing prices have already run far away." He raised his voice, "How on earth can ordinary people like us catch up with housing prices that rise day by day?"

◆ Prices rise again overnight... How much have they increased?

As ordinary people complain, the cumulative increase rate of apartment prices in the metropolitan area (Seoul, Gyeonggi, Incheon) has exceeded 11% this year. According to statistics from the Korea Real Estate Board on the 20th, apartment sale prices in the metropolitan area surged by 11.12% cumulatively from January to July this year. Since the Real Estate Board began compiling related statistics in December 2003, this is the first time the cumulative increase rate during this period has reached double digits.

Apartment prices in the metropolitan area rose more than 1% every month from January to July. Starting with a 1.12% increase in January, the rates were 1.71% in February, 1.40% in March, 1.33% in April, 1.21% in May, 1.53% in June, and 1.64% in July. This is also the first time that the monthly increase rate exceeded 1% for seven consecutive months.

Housing prices in Gyeonggi Province also continue to rise. Apartment prices in Dongducheon City, Gyeonggi, rose more than 35% this year, recording the highest increase rate nationwide.

According to a review of KB Real Estate Live On's housing price trends by Economic Man Lab, a real estate information provider, on the 18th, the average sale price per 3.3㎡ of apartments in Dongducheon City rose from 6,222,000 KRW in January to 8,427,000 KRW in July, an increase of 35.4%.

During the same period, Ansan City rose from 13,329,000 KRW to 17,774,000 KRW, up 33.4%, and Siheung City rose from 11,566,000 KRW to 15,395,000 KRW, up 33.1%.

Hwang Han-sol, a research analyst at Economic Man Lab, explained, "As the housing supply shortage continues and apartment prices in the metropolitan area rise, more and more people are trying to buy their own homes before it gets too late, so the price increase trend of apartments in the outskirts of Gyeonggi Province is expected to continue."

In July, the average sale price and jeonse deposit of row houses and multi-family houses in Seoul rose by about 30% in just one month. A real estate expert explained, "It seems that villa prices have soared, centered around Seoul."
[Image source=Yonhap News]

◆ Villa prices rise following apartments... Nationwide average sale price up 16% in one month

Meanwhile, in July, the average sale price and jeonse (long-term deposit lease) price of row houses and multi-family houses (villas) in Seoul rose about 30% in one month. On the 24th, Station3, which operates the real estate platform 'Dabang,' analyzed the Korea Real Estate Board's statistics on the average sale price of row houses and multi-family houses (villas). According to the analysis, the average sale price in Seoul was 346.29 million KRW, up 28.1% from the previous month. The nationwide average sale price was 202.14 million KRW, up 16% in one month.

By city, county, and district areas, the villa sale price in the northern downtown area of Seoul (Jongno, Jung, Yongsan districts) was 490.13 million KRW, up 37.9% from the previous month. Villa sale prices in the southeastern Gangnam area (Seocho, Gangnam, Songpa, Gangdong) and southwestern areas (Yangcheon, Gangseo, Guro, Geumcheon, Yeongdeungpo, Dongjak, Gwanak) recorded 505.47 million KRW and 290.15 million KRW, rising 33.7% and 32.1%, respectively.

Jeonse prices also rose. The average jeonse price of villas in Seoul in July was 243 million KRW, up 31.5% from the previous month. The northern downtown area was 346.42 million KRW, up 56.9%, and the southeastern Gangnam area soared to 354.86 million KRW, up 42.1%.

The northwestern area of northern Seoul (210.12 million KRW, Eunpyeong, Seodaemun, Mapo) and the northeastern area (194.76 million KRW, Seongdong, Gwangjin, Dongdaemun, Jungnang, Seongbuk, Gangbuk, Dobong, Nowon) rose 21.0% and 21.1%, respectively. Overall, the nationwide average jeonse price rose 15.5% to 137.91 million KRW.

The previous highest monthly increase rates for Seoul villa average sale and jeonse prices were in December 2017, at 12.1% and 23.4%, respectively. Regarding this, the Korea Real Estate Board explained that the background of such a sharp rise is due to sample redesign. Although the monthly sample size for row houses and multi-family houses was 6,350 households, unchanged from before, the extraction of new samples from the population caused larger fluctuations in sale and jeonse prices.

A Dabang official explained, "It seems that villa prices soared mainly in Seoul due to buyers' expectations that villa prices will rise following apartments," adding, "Due to the jeonse shortage, jeonse demand is increasing, supporting sale prices."

From January to July this year, the cumulative increase rate of apartment prices in the metropolitan area (Seoul, Gyeonggi, Incheon) has exceeded 11%. [Image source=Yonhap News]

◆ Loan regulations blocking 'all-in home buying'... Non-homeowners sigh

Given the situation, the government has implemented strong loan regulations to stabilize real estate prices, aiming to curb household debt. However, among non-homeowner actual demanders, there are complaints that it is truly suffocating. The nature of household debt itself is a result of borrowing to buy homes fearing further price increases and reluctantly borrowing to prepare jeonse deposits, but due to uniform loan regulations, plans to buy homes have disappeared.

According to the financial sector on the 25th, NH Nonghyup Bank decided to completely suspend new mortgage loans until November. SC First Bank also announced a temporary suspension of new contracts for its mortgage loan product 'First Home Loan' based on the new balance standard COFIX (a benchmark interest rate announced by the Banks Association).

Earlier, in April, financial authorities set a policy to manage the annual household loan growth rate of each bank at 5-6% and ordered banks to voluntarily manage total loan volume. They also requested second-tier financial institutions such as savings banks and mutual finance to limit credit loan amounts to the borrower's annual income level.

As the situation worsens, concerns are growing that more banks will suspend loans. Regarding this, financial authorities stated, "The suspension of mortgage loans by Nonghyup Bank and others was a measure taken to comply with plans after exceeding the original target significantly. Most financial companies, including major commercial banks, still have plenty of room within their household loan targets, so the spread of loan suspensions is very unlikely."

Meanwhile, amid soaring housing prices and loan regulations, a survey released on the 24th showed that about half of the public expects nationwide housing prices to rise in the second half of this year.

According to the 'Real Estate Market Survey and Analysis' released by the Korea Research Institute for Human Settlements on the day, a survey was conducted in May targeting 6,680 general households and 2,338 brokerage offices about housing price prospects for the second half of this year. More than half answered that prices would "rise somewhat." Among general households, 49.6% expected housing prices to "rise somewhat" in the second half of this year. 39.5% answered "no change."

By region, respondents expecting "somewhat rise" were 59.3% in Incheon, 53.4% in Gyeonggi, and 51.6% in Seoul. Regions with lower "somewhat rise" response rates included North Gyeongsang (35.5%), South Jeolla (36.7%), and Sejong (37.5%). Notably, Sejong had a higher "somewhat decline" response rate at 15.0% compared to other regions.

Among brokerage offices, 43.8% expected housing prices nationwide to "rise somewhat" in the second half of this year. By region, "somewhat rise" response rates were 60.0% in Incheon, 55.0% in Gangwon, and 53.3% in Daejeon. In Daegu (38.2%), Sejong (26.3%), and Ulsan (23.5%), the "somewhat decline" response rates were relatively higher than in other regions.

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