[Report] "It's Not 500 Million, It's 700 Million?"... Why Newlyweds Who Sought All-in Loans for Bongcheon-dong Apartments Have Gone Silent

Homebuyers Need 200 Million Won More in Loans Than Last Year

Loan Regulation Easing Announced for Young Buyers

Apartment Demand Drops in Seoul’s Outer Districts

"All the customers who said they would check loan options and call back have disappeared without a trace. I don't think things will change much even at the end of the year."

An apartment complex in Bongcheon-dong, Gwanak-gu, Seoul, visited on the 30th of last month. Photo by Seongah Shim

Real estate agencies around Bongcheon-dong, Gwanak-gu, Seoul, visited on September 30, were generally quiet. Although the government has announced plans to ease loan regulations for real buyers such as young people and newlyweds, the buying sentiment for apartments in the area has stalled completely.

Up until August this year, this neighborhood saw many "all-in" purchases by young newly married couples with limited financial resources. This is because there are many mid- to low-priced apartments under 1.5 billion won, making it relatively easy to qualify for loans.

However, the atmosphere changed within just a few months. Mr. A, who operates a real estate agency in Bongcheon-dong, said, "Recently, visits from young people have dropped sharply. In the past, many newlyweds took out full loans of 600 million won to buy homes, but now we barely get any inquiries at all."

The biggest reason is that the surge in housing prices has been accompanied by an increase in the size of required loans. Real estate agent Mr. B explained, "In just a year, apartment prices in this area have jumped by several hundred million won, now reaching between 1.1 and 1.3 billion won. It is also hard to get bank loans, making it difficult for young people with limited financial means to afford these homes."

Although the government has proposed measures to facilitate loans for young buyers recently, those working on the ground say they hardly feel any impact. In August, the Financial Services Commission significantly expanded the application of the "future income recognition standard" for the Debt Service Ratio (DSR), which takes into account the possibility of increased future income, and proposed excluding real buyers such as newlyweds from the overall household loan limit.

Real estate agencies around Bongcheon-dong, Gwanak-gu, Seoul, visited on the 30th of last month. Photo by Seongah Shim

According to the Korea Real Estate Board, Gwanak-gu recorded a cumulative apartment sale price increase rate of 15.8% from February last year to the third week of September this year, making it one of the fastest-rising districts on the outskirts of Seoul. The 59-square-meter unit of Gwanak Dream Samsung in Bongcheon-dong broke through 1.1 billion won this year after selling for around 800–900 million won at the end of last year. The same-sized unit in Bongcheon Donga traded at 1.125 billion won last month, up from the 700 million won range, while Byeoksan Blooming 3rd-annex reached a record high of 1.048 billion won.

If a first-time homebuyer took out a mortgage loan (LTV 70%) to purchase a unit in Bongcheon Donga last year, they would have borrowed up to 525 million won. But if buying this year, they would need to borrow as much as 787.5 million won. However, even for apartments under 1.5 billion won, there is a loan cap of 600 million won, so buyers would need to secure an additional 525 million won themselves. In effect, the amount that must be borrowed from financial institutions to buy an apartment in this area has increased by more than 200 million won in just one year.

This phenomenon is not limited to Gwanak-gu, but is appearing across all of Seoul's outskirts where mid- to low-priced apartments are concentrated, including Gangseo-gu, Nowon-gu, and Dobong-gu.

A real estate agent in Gangseo-gu said, "Government loan regulations have gotten tougher, but apartment sale prices in the area have jumped by 20–30%. As a result, transactions have slowed sharply in just a few months. It's rumored that regulations will ease a bit by year's end, but when we check with banks, it doesn't seem like conditions will truly improve, so we really can't feel any change."

Kim Jaekyung, head of 2Me Real Estate Consulting, remarked, "For those in their 20s and 30s, even properties in the city outskirts have become unaffordable. Unless you have help from your parents, the housing ladder has effectively been pulled up." He added, "Young people are forced to stay in the rental market or in non-apartment housing, but if you look at non-apartment options in Seoul under 400 million won as per the government's Youth Future Bogeumjari Loan policy, the living conditions are poor, making the situation even harder for young people."

This content was produced with the assistance of AI translation services.