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S. Korea’s housing market polarization grows

Spending on housing also soars amid jeonse shortage

Apartment complexes in central Seoul. (Yonhap)
Apartment complexes in central Seoul. (Yonhap)
The number of multiple-home owners with five or more homes hit a record high last year, while the number of nonhomeowners also grew, data showed Monday, reflecting an intensifying housing market polarization in South Korea.

The data came amid growing doubts on the effectiveness of the Moon Jae-in administration’s series of real estate measures focused on levying heavier taxes on multiple-home owners and adopting stricter loan rules. 

Owners of five or more homes increased 0.75 percent, or by 883 people on-year to 118,062 as of early November last year, data compiled by Statistics Korea showed. The figure marked the largest since 2012 when the government started compiling the data in 2012. 

The number of owners with five or more homes surpassed 100,000 in 2015 and has been gaining momentum since. 

The number of owners with 10 or more homes also reached a record high, after increasing by 0.1 percent, or 45 people, in the cited period to 42,868.
Categorized by Statistics Korea as the “most abundant multiple-home owners,” those with 51 or more homes gained 4.35 percent, or 82 people, on-year to 1,964. The corresponding figure for 2012 stood at 949 and after hitting a high of 2,907 in 2015, the figure fell until last year, when it noticeably rebounded. 

On the other hand, Korean households yet to own a home increased by 1.6 percent to some 8.8 million, which accounts for 43.6 percent of all households here, the data showed. 

By city or province, Seoul was the only area where the number of households owning homes outranked the number of households not owning homes. The number of households not owning homes in the nation’s capital increased by 2.4 percent to approximately 1.9 million, compared to households owning homes in the area, which came to roughly 1.8 million, in the cited period. 

By age group, those below 30 saw gains in both the number of homeowners and nonhomeowners. 

The government has so far announced 23 sets of real estate measures to curb soaring housing prices in key areas. On top of levying heavier taxes on multiple-home owners, the measures aim to deter the rampant practice of speculative buying and tighten the government’s grip over the “gap investment,” a popular method of investment here. 

The investment is made possible by Korea’s unique jeonse system, which requires a lump-sum deposit instead of monthly rent, allowing investors to purchase homes by investing relatively small sums -- the gap between the down payment and the jeonse deposit that the buyer will receive from a tenant.

But according to a local civic group here earlier this month, Seoul’s apartment prices have surged 58 percent since President Moon Jae-in took office in 2017, which is 4.5 times the increase rate of the combined period of the preceding two administrations. The announcement by the Citizens’ Coalition for Economic Justice came after the incumbent government said that Seoul’s apartment prices rose by merely 14 percent in the cited roughly three-year period. 

The average apartment price in Seoul jumped from 26.25 million won ($23,640) per 3.3 square meters to 41.56 million won under the current administration, marking a 58 percent increase, the CCEJ said. 

Amid the widening gap in the nation’s housing market, households’ expenditures on housing also sharply rose in the third quarter, due to soaring apartment prices amid a jeonse shortage, government data showed Monday. 

According to the quarterly household expenditure trend report released by Statistics Korea, the average monthly actual housing expenses of households with more than two members jumped 1.6 percent on-year to 84,200 won, in the given period. The average of the actual housing expenses includes those who pay monthly rent, hold a jeonse contract and own a house. The rise of the figure appears to have been driven by an increase in monthly rent expenditures.

The recent surge in housing expenses came amid an unprecedented shortage of jeonse apartment leases after many landlords had withdrawn their jeonse offers from the property market following the passage of tenant protection laws, which enable tenants to unilaterally prolong their jeonse contract periods by another two years and impose a cap on deposit hikes.

By Jung Min-kyung and Choi Jae-hee (  (