Easing of Loan Curbs Galvanizes 1st Time Homebuyers

The easing of housing loan restrictions and tax cuts have galvanized first-time homebuyers despite the economic crunch and sky-high inflation.

According to court registry data, 25,296 people bought their first home last month, accounting for a whopping 39.52 percent of total home buyers. That was the biggest proportion since December 2013 and the highest number in eight months.

Last October, when the real estate market was in the doldrums, the number of first-time home buyers fell to just 17,087. But the government scrapped housing loan curbs and slashed taxes for first-time home buyers last month.

In January, the Korea Housing Finance Corporation started offering a relatively low-interest loans for those who bought homes costing less than W900 million (US$1=W1,311).

Gyeonggi Province surrounding Seoul saw the sharpest increase in first-time buyers with 9,137 people, up 2,399 from a month earlier.

Apartments and homes in the satellite cities are significantly cheaper than in Seoul and often fall within the bracket for the KHFC loans. The loans are only available this year until W39.6 trillion the government has allocated run out, but they no longer seem very attractive as banks and other lenders are ending their rate-hiking sprees and now offer loans with even lower interest rates.