Despite LTV Relaxation... First-Time Homebuyers in August 'Again' Decrease

20,132 First-Time Buyers of Multi-Unit Buildings
Lowest in 9 Years 7 Months Since January 2013
Despite 80% LTV Easing for First-Time Buyers, Market Remains Cautious

[Image source=Yonhap News]

[Asia Economy Reporter Hwang Seoyul] Last month, policies such as easing the LTV (Loan-to-Value ratio) to 80% for first-time homebuyers were implemented to reduce financial burdens, but they have proven largely ineffective. The number of first-time real estate buyers hit a low point again last month, following the lowest figure in over nine years recorded in July.

According to the Korea Court Registry Information Plaza on the 5th, the number of first-time real estate buyers for collective buildings (officetels, apartments, row houses, multi-family houses, etc.) was 24,132 (as of the 3rd), a decrease of 1,686 from the previous month (25,818). This is the lowest figure in 9 years and 7 months since January 2013 (15,000). The number of first-time real estate buyers peaked at 30,521 in January this year but has not exceeded the 20,000 mark since then. Since May (27,428), the numbers have declined for three consecutive months: June 26,567, July 25,818.

The decline is similar among the 2030 generation, who account for more than half of first-time real estate buyers. In August, the number of first-time buyers in the 2030 age group decreased for the third consecutive month to 13,237, down from 13,261 in the previous month. This is also the lowest figure since January 2013 (8,067).

Real estate stock photo / Photo by Mun Ho-nam munonam@

August was the first month the government implemented the LTV 80% easing policy exclusively for first-time homebuyers. Starting from the 1st of last month, to reduce the financial burden on non-homeowners, the government applied an LTV cap of up to 80% regardless of the location or price of the home for first-time homebuyers, and increased the loan limit to a maximum of 600 million KRW. Previously, in speculative and overheated speculation areas, the LTV cap was 50-60% for homes priced under 900 million KRW, and in regulated areas, the cap was 60-70% for homes priced under 800 million KRW. The loan limit was also under 400 million KRW.

Initially, it was expected that the Seoul metropolitan area, with many regulated zones, would benefit greatly from the LTV 80% easing policy. However, the number of first-time buyers in the metropolitan area also showed a high rate of decline, indicating a cautious market sentiment. Among all cities and provinces nationwide, Seoul, designated entirely as a speculative overheated district, recorded the highest year-on-year decrease rate from January to August this year at -47.57%. Gyeonggi (-46.67%) and Incheon (-34.97%) ranked 3rd and 5th respectively. The sales price index in the metropolitan area has been continuously declining since February this year amid the real estate market downturn. According to the Korea Real Estate Board, the metropolitan sales price index last month also decreased by 0.2% from the previous month (106) to 105.8.

Experts predict that despite the government announcing measures on the 16th to restore the housing ladder, such as increasing the supply of public rental housing, youth cost-price housing, and first homes near subway stations, a similar trend is expected to continue in the second half of the year. Professor Kwon Daejung of Myongji University’s Department of Real Estate said, "With sales prices continuously falling and purchasing power weakened due to interest rate hikes, there are almost no buyers trying to purchase homes." Park Wongap, Senior Real Estate Specialist at KB Kookmin Bank, also said, "The MZ generation is financially savvy and will not rush into buying amid falling home prices."

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