Young Buyers Near Half of Seoul Apartment Purchases Amid Tight Lending

The proportion of apartment purchases in Seoul by buyers aged 30 and under has approached half for the first time, reaching a record high of 48.0%. This figure is 4.4 percentage points higher than the previous peak of 43.6% in October 2020, during a period of ultra-low interest rates. The increase is particularly notable given the stringent regulations that have limited mortgage loan amounts and blocked gap investments. Analysts suggest that while regulations have suppressed demand from multiple homeowners and investors, the presence of first-time buyers in their 30s has paradoxically grown, taking advantage of exceptions in the rules.

According to an analysis by the Korea Real Estate Agency of the 'Apartment Transaction Status by Buyer Age' on June 11, the share of buyers in their 20s and 30s in Seoul's apartment sales for April was recorded at 48.0%. This figure dropped to 34.8% in January due to the impact of the October 15 measures but has risen consecutively for three months, reaching a new high since the data collection began. Notably, the share of buyers in their 30s alone accounted for 45.8%, nearly half of all purchases.

Data from the Supreme Court's registration information portal indicates that the proportion of first-time buyers of collective buildings in Seoul from January to May was 45.6%, the highest since the relevant statistics were first published in 2010. Among these, buyers in their 30s made up 56.1%, surpassing half for the first time.

While these figures may seem comparable to the past peak of young buyers, the context is entirely different. The 43.6% in October 2020 occurred during a liquidity-driven market with a base interest rate of 0.5% and the ability to leverage credit loans. In contrast, the average mortgage interest rate in April this year remained in the 4% range, compounded by a three-tiered debt service ratio (DSR) regulation, restrictions on gap investments, and mandatory residency in designated land transaction areas. Although the environment for purchasing homes has become more challenging, the market entry share of those aged 30 and under has actually increased.

The absolute transaction volume also reflects this trend. The number of apartment purchases by buyers aged 30 and under in Seoul rose from 2,069 in January to 3,609 in April, a 74% increase. This figure is the second highest since the surge in demand just before the October 15 measures, which saw 4,366 transactions in October last year. During the same period, purchases by buyers in their 40s increased by 33%, while those aged 50 and above rose by about 20%, but the growth rate for buyers aged 30 and under was the fastest.

The methods of financing have also changed. In the past, young buyers often relied on credit loans and overdraft accounts, but recently, there has been a trend of liquidating financial assets such as stocks and cryptocurrencies to raise their own capital and utilize first-time buyer loan limits. Although lending regulations have tightened, pathways remain for first-time homebuyers under 30 who can take advantage of policy financing exceptions.

Additionally, the upcoming end of the temporary suspension of the capital gains tax for multiple homeowners has prompted some sellers to enter the market, further encouraging entry by young buyers. While investment demand has decreased due to regulations, the demand for actual residence has absorbed this, resulting in a greater share of purchases by younger individuals.

Nam Hyuk-woo, a researcher at Woori Bank's real estate research institute, stated, "Despite much stricter lending conditions than before, the increase in mortgage loans among those in their 20s and 30s indicates that demand for purchases remains strong. Those aged 50 and above, who already own assets in key areas, have relatively less incentive to make additional purchases, which is why the lending trends are diverging."