"3040 Mujuhtaekja, It's Not That They Don't Buy Houses, They Can't Buy Them"

3040 Panic Buying Despite Government's Peak Price Warning
Currently, 3040 Without Homes Desire to Own but Lack Purchasing Power
Gunsanyeon: "Significant Gap Among Homeless... Precise Policy Response Needed"

Apartments in Seoul with an average jeonse price exceeding 100 million KRW per 3.3㎡ are appearing one after another. According to real estate information provider Kyeongjemanlab and the Ministry of Land, Infrastructure and Transport's actual transaction price disclosure system, a jeonse contract was signed on the 5th of last month for a 31.402㎡ exclusive area apartment in "Hillstate 1 Complex" in Samseong-dong, Gangnam-gu, Seoul, with a deposit of 1.26 billion KRW (6th floor). The photo shows apartment complexes in Samseong-dong and Cheongdam-dong, Gangnam-gu, Seoul.

Currently, individuals in their 30s and 40s who do not own a home have dreams of owning their own house, but due to already skyrocketing housing prices and loan regulations, it has been diagnosed that even if they want to buy a house, they are unable to do so.

On the 23rd, the Korea Research Institute for Human Settlements announced through the report titled "Analysis of Housing Purchase Capacity of Non-Homeowners in Their 30s and 40s in the Seoul Metropolitan Area," based on housing buyer data from the credit rating agency Korea Credit Bureau (KCB), that "the remaining 30-40 age group who are currently non-homeowners do not have sufficient purchasing power, especially non-homeowners in Seoul and Gyeonggi regions," stating this.

The report comprehensively analyzed their purchasing power by considering the current assets of non-homeowners, total debt service ratio (DTI), loan-to-value ratio (LTV), and the amount that can be procured under current loan regulations. Purchasing power is the sum of the maximum equity that can be raised to buy a house and the amount that can be borrowed from financial institutions under the current level of financial regulation.

As a result of the analysis, it was found that the non-homeowner 30-40 generation living in Seoul and Gyeonggi areas do not have sufficient room to enter the housing market due to LTV restrictions caused by rising housing prices.

In particular, in Seoul, it was analyzed that even with the maximum loan, it is difficult to purchase a median-priced house in Seoul or even the house currently rented under the jeonse (key money deposit) system with only the current jeonse funds.

In the Gyeonggi region, it is possible to purchase the currently rented house, but there is insufficient capacity to move to a median-level house.

Analysis Results of Housing Purchase Power by Region and Age Group

Until recently, the 30-40 generation in the Seoul metropolitan area, including Seoul and Gyeonggi, have led the housing market by engaging in "panic buying." They showed characteristics of purchasing houses by utilizing assets and finances regardless of government supply signals.

In fact, the housing purchase trend among the 30-40 generation has significantly strengthened in the past 1-2 years. In the first quarter of 2019, the proportion of non-homeowners aged 40 and below who purchased houses in Seoul was around 60%, but it rose to 71.1% in the fourth quarter of last year.

The proportion of first-time real estate buyers among the 30-40 generation also increased from about 14-20% in 2018-2019 to 26% in the second half of last year.

The report cited reasons why non-homeowners in the metropolitan area attempted to purchase houses as ▲overheated subscription competition ▲high competition rates for special supply such as newlyweds ▲giving up subscriptions due to income restrictions for dual-income households ▲chasing purchases due to rapid rise in jeonse prices ▲psychology of avoiding being left behind as non-homeowners.

Despite the panic buying craze, the 30-40 generation who remain non-homeowners are expected to determine the future direction of the housing market.

The Korea Research Institute for Human Settlements stated, "Currently, it is difficult for non-homeowners in their 30s and 40s to enter the housing market, and especially the gap is expected to be greater for non-homeowners in Seoul," adding, "a sophisticated policy response to their purchasing desires is necessary."

The institute further stated, "If housing prices enter a downward phase, excessive housing purchases may negatively affect the market through restrictions on residential mobility, 'empty jeonse' (key money deposit) situations, and reverse jeonse, so caution is required."

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