Aerial view of an apartment complex in Seoul (Yonhap)
A growing number of young South Koreans under 10 years old have purchased apartments across the nation with financial support from their parents, a lawmaker said Monday, raising concerns over inheritance for real estate speculation.
The number of apartment purchases by the elementary-school kids and younger came in at 552 from September 2017 to last month, which amounted to 104.7 billion won ($88.2 million), according to data from the Ministry of Land, Infrastructure and Transport submitted to Rep. Kim Hoi-jae of the ruling Democratic Party of Korea.
The young homeowners’ parents appeared to have granted financial assets to their children to buy the apartments as part of a “gap investment” strategy, Kim said.
The housebuying method involves purchasing houses with “jeonse” tenants, who rent houses by paying only a lump-sum deposit. With the tenant’s deposit, a gap investor can buy a home with a modest down payment consisting only of the difference between the price of the home and the amount of the deposit.
More than 80 percent of the apartment purchases were aimed at renting out the homes. Nearly 67 percent of the total apartment purchases by the children were financed by succession of rental deposits from their parents. Those backed by inheritance of cash accounted for 59 percent, data showed.
By age, 8-year-old children bought apartments worth 18.2 billion won, while those aged 9 and 7 purchased 18.19 billion won and 12.8 billion won, respectively.
“Real estate speculation among young South Koreans is widening inequality of assets and wealth. Calls are rising for tougher measures to supervise any possible illegal inheritance for speculative purposes,” Kim said.
By Choi Jae-hee (firstname.lastname@example.org