Apartment complexes line the Han River in Dongbu Ichon-dong, Gangnam District and Songpa District in Seoul, as seen from the 63 Sky Picnic observatory at 63 Square in Yeouido, Yeongdeung District, on Aug. 10.YONHAP
Song Ho-keun
The author is a columnist at the JoongAng Ilbo, a chair professor and director of Doheon Academy, Hallym University.
It was a brutally hot summer. Unfazed by a heat wave unseen in decades, the government kept rolling out decisions. Side effects seemed beside the point. The president became the ultimate backseat driver, with his offhand remarks landing on policy lists.
The abolition of prosecutors’ supplementary investigative authority was decided just as the case of a missing woman in Jeju emerged after police had already closed it. The ruling party spent the summer consumed by its leadership election, a commotion far removed from livelihoods. Then came a flood of housing measures.
A progressive government wrestling with housing prices deserves applause, but it is hard to forget the Moon Jae-in administration, which retreated after 24 rounds of measures. Tenants, whom progressives should protect first, are already suffering. Rent and jeonse, Korea’s lump-sum deposit lease system, were missing from the initial measures.
The anxiety of roughly 1.8 million single-home owners in the Seoul metropolitan area who do not live in their properties has spilled over to tenants. Listings have dried up as tenants rush to nearby brokerages, while rents have risen by 100 million to 200 million won ($73,150 to $146,300). High-end apartment prices have cooled under heavier comprehensive real estate holding and capital gains taxes, but rising prices for midrange and newly built apartments could spread across the market.
Koreans in their 20s to 40s may have to abandon the dream of homeownership. In the past, monthly rent and jeonse served as steppingstones. People bought homes with tenants in place, then moved in once their finances improved. Many salaried workers followed that route. Consider the following example of a now-retired professor.
The professor taught at a provincial university before moving to a Seoul university after the Asian financial crisis, when his child was entering college. In the early 2000s, with home prices soaring, the 100 million won from selling his provincial apartment was nowhere near enough. After a month spent crisscrossing southern Seoul in search of a home, from Gocheok-dong in the west to Dunchon-dong in the east, he chose the conventional route: buy with a jeonse tenant, then move in later.
He rented cheaply in a new town and spent three hours commuting each day. Years later, he moved into his own home with 400 million won in debt. Becoming a Gangnam resident brought pride and pain. Interest rates were around 5 percent, and principal and interest consumed 40 percent of his salary. Fifteen years later, nearing 60, he and his wife raised a glass to celebrate being debt-free.
He had spent the prime of his life becoming a homeowner. Still, he was better off than many. He retired at 65 with a pension. But after several peaceful years, worries returned. He had rented out his Seoul home and moved to a provincial city to care for grandchildren, putting him in the category of a “nonresident single-home owner.”
Committed to equality, he had registered the home jointly with his wife. That leaves them exposed to higher holding and capital gains taxes. Expenses for their children’s marriages and grandchildren mean returning home would require new debt. Selling is no simple decision either.
People in their 20s to 40s may call such experiences luxurious. They have a point when 10 percent of newlywed couples without homes live apart. Back then, homes affordable with some borrowing were plentiful, and even Gangnam was attainable with a stretch. Prices have since tripled or quadrupled.
It is reasonable to demand accountability for an unfair property market that concentrated real estate wealth among people in their 60s and 70s. What we never imagined was that younger generations’ arduous path to homeownership could be blocked altogether. For them, the road has effectively disappeared.
Even if young people tighten their belts and save 3 million won a month, accumulating 500 million to 600 million won over 15 years, an apartment may remain beyond reach. Some enter the stock market only to lose their seed money. Officials who respond by recommending converted-bus communities or directing loans only toward non-apartment housing offer arrogant evasions rather than solutions.
Policies that fail to support young people, the homeless and vulnerable groups ultimately fuel class resentment. Fearing generational warfare, the professor wonders what should be done. Could at least the additional revenue from capital gains and property holding taxes help younger people pursue homeownership? Could a “social” housing fund for future generations grant tax exemptions to homeowners who donate part of their property?
That will probably never happen. Perhaps the heat has gone to my head.
This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
