September 22, 2020 08:29
The government's endless series of curbs on real-estate speculation appears to have had the paradoxical effect of preventing young families buying a starter home.
A Hana Bank report last week based on court registrations shows how much more difficult it has become for low-income households to buy their first home.
The proportion of people purchasing their first apartment in Seoul and surrounding Gyeonggi Province plummeted from 41 percent in 2013 to 31 percent in the first half of this year. Soaring apartment prices either prompted more and more people without homes to delay buying one or give up altogether.
The number of people purchasing their first apartment across the country shrank from 530,000 in 2015 to 410,000 last year. In Seoul alone, 101,000 people bought their first apartment in 2015, but that number fell to 57,000 last year.
Hana Bank said the proportion of first-time buyers rose until 2013 thanks to low-interest loans, eased regulations on loans and lowered transfer and acquisition taxes, all aimed at jumpstarting a moribund real estate market.
But it fell starting in 2014 with a gradual increase in apartment prices. Despite government efforts to tame soaring prices, apartment values in the greater Seoul area have surged, while policies aimed at suppressing demand had various negative effects.
"Tougher regulations in popular neighborhoods in Seoul led to soaring prices in previously unpopular areas that triggered an across-the-board increase in prices," the report said. "Sweeping regulations on property sales and toughened laws protecting tenants caused balloon effects including rising rents."
Since 2017, an endless string of regulations have been introduced to crack down on multiple-home ownership, which is regarded as speculation, yet people who own several homes appear to have dodged the law by various methods like trusts, passing them to their children as gifts, or selling them into corporate ownership.
The government's announcement in August 2017 of toughened housing loan regulations on multiple-home owners resulted in the highest-ever number of apartments being placed in trusts that month at 6,589. And the announcement in July this year of increased taxes on multiple-home owners prompted many of them nominally to hand over their property to family members. During the month of July, a record number of apartments in Seoul (6,456) were gifted to family members.
"Successive real-estate regulations focused on suppressing demand could send a message to the market that housing prices will continue to rise and increase jitters among potential home buyers," the bank warned.
Due to fears that a continued rise in apartment prices will make it impossible to buy a home, a growing number of people in their 30s are taking out all the loans they can get to buy apartments while they still can, which leads to spiraling debt. The proportion of apartment buyers in Seoul in their 30s rose from 24 percent in 2017 to 28 percent in the first half of this year.
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