Panic-buying in the property market continues despite tougher lending regulations
Aerial view of an apartment complex in Seoul (Yonhap)
On the back of soaring housing prices, a growing number of South Koreans in their 20s and 30s have rushed to buying apartments, with nearly 4 out of 10 Seoul apartments being purchased by those young buyers, data showed Thursday.
According to data from the Korea Real Estate Board, people in their 30s bought a total of 12,550 homes in the capital city between January and July, which accounted for 36.9 percent of the total 34,045 properties that changed hands in the given period. Those aged 20-29 or younger, who purchased a total of 1,702 apartments, took up 5 percent.
This means buyers in their 30s and 40s accounted for 41.9 percent of Seoul apartment sales, extending an upward trend from 31.8 percent in 2019 and last year’s 37.4 percent.
Meanwhile, home buyers in their 40s, 50s, 60s and 70s or older, accounted for 26.2 percent, 15.5 percent, 8.8 percent and 5.6 percent of the total transactions in the January-July period, respectively.
Young buyers also continued their spending spree on property in nearby areas.
Nearly 35.8 percent of 124,391 apartment purchases in Gyeonggi Province were made by people in their 30s or younger, during the same period, sharply up from 30.4 percent last year. The figure for Incheon came in at 32.6 percent of 33,524 transactions, gaining 5.4 percentage point from a year earlier, data showed.
Young people’s panic buying trend in the local real estate market has gathered momentum despite the tougher lending regulations.
Since July, the policymaking FSC has applied a stricter lending calculation for mortgage loans, called the debt service ratio, which measures how much a borrower has to pay in principal and interest payments in proportion to his or her yearly income. Under the new rule that only applies to first-tier banking circles, a borrower’s mortgage payments cannot exceed 40 percent of annual income if the home costs more than 600 million won in designated speculative areas.
Experts say the trend of young Koreans taking out credit loans to fund purchases will continue as long as apartment prices in Seoul and nearby cities keep rising, based on fears that they might never be able to own a home if they wait any longer.
“Koreans in their 20s and 30s hurried to buy homes since apartment prices surged not only in the wealthy Gangnam area of Seoul, but also in Gangbuk. As housing prices in Seoul seem to maintain an upward trend for the time being, they have increasingly turned to buying undervalued apartments the non-Seoul metropolitan regions,” said Park Won-kab, who leads the real estate team at KB Kookmin Bank.
The average price of apartments in Seoul, climbed nearly 100 million won ($87,000) or 9.7 percent in the first six months of this year to 1.14 billion won, according to data compiled by KB Kookmin Bank.
By Choi Jae-hee (email@example.com