[2022 Real Estate] Tears of the 2030 Yeongkkeul Generation

Double Burden of High Interest Rates and Sharp Housing Price Drops
26.2% of Multiple Debtors Under 30
'Nodogang' Housing Prices Fall Simultaneously
Housing Sales Volume Under 30 Hits Record Low at 24.1%

[Asia Economy Reporter Kwak Min-jae] The harsh reality faced by the 2030 generation who jumped into 'panic buying' to avoid becoming 'sudden paupers' amid the real estate market frenzy in recent years was brutal. Since the end of last year, as the interest rate hike period began in earnest, the younger generation who purchased homes with 'all-in' loans took a direct hit. Amid the snowballing interest burden due to high interest rates, on top of that, house prices plunged sharply, causing a 'double hardship' and turning them into multiple debtors.

◆ "Bought with all-in, ended up at the peak"... Multiple debtors' interest burden = Among the non-homeowners who sought to buy their own homes last year when house prices peaked, the youth generation stood out. According to the '2021 Housing Ownership Statistics' released by Statistics Korea last month, 1,036,000 people who were non-homeowners in 2020 purchased homes last year. Among them, by age group, those under 30, who have a vulnerable asset structure, numbered 128,000 (9.2%), an increase of 20,000 from the previous year (108,000; 7.6%). While house prices are falling, loan interest rates are rising, and the youth generation is included in the groups likely to face difficulties currently.

The problem is that the proportion of the 2030 generation among all multiple debtors is significantly increasing. According to the Bank of Korea, as of the end of last year, the proportion of multiple debtors aged 30 or younger was 26.2%. This is 1 percentage point higher than a year ago (25.2%) and 2.3 percentage points higher than in 2017 (23.9%). Multiple debtors refer to people who have borrowed money from three or more financial institutions (including loan companies). With the upper limit of mortgage loan interest rates approaching 8%, the burden of rising delinquency rates is expected to be considerable. In the worst case, the 'house poor' phenomenon experienced by the 4050 generation during the 2008 global financial crisis could appear among the 2030 generation.

◆ 2030 generation's all-in on 'Nodogang'... Large housing price drop = The main investment targets for the 2030 generation were the so-called 'Nodogang (Nowon, Dobong, Gangbuk districts)' and 'Geumgwan-gu (Geumcheon, Gwanak, Guro districts)'. Located in Seoul and relatively affordable, these areas naturally attracted the attention of young people with limited spare funds. In particular, the rental crisis triggered by the new lease law and the steep rise in house prices further fueled their buying appetite.

However, as the house prices in 'Nodogang (Nowon, Dobong, Gangbuk)', which showed a fierce upward trend last year, plunged sharply this year, the cries of the 2030 generation grew louder. According to the Korea Real Estate Board, as of the third week of this month on the 19th, Seoul apartment prices fell by -1.13%, a larger decline than the previous week (-1.08%), with the decline in the Nodogang area being particularly notable. Nowon-gu in Seoul fell by -1.34%, Dobong-gu by -1.26%, and Gangbuk-gu by -0.96%. This is interpreted as a result of an increase in 'cut-loss' listings by 'all-in buyers' who could not bear the interest burden after aggressively borrowing last year.

With expectations that the burden of mortgage loan interest and the decline in house prices may continue for a long time, the 2030 generation is withdrawing from the real estate market. According to the Korea Real Estate Board's housing purchase transaction volume by age group, from January to October this year, the number of housing sales transactions by those aged 30 or younger was 108,638, accounting for 24.1% of the total, marking the lowest proportion ever recorded. This is the lowest proportion since the Korea Real Estate Board began compiling related statistics in 2019 (based on January to October data).

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