Amid the deepening slump in the real estate market, including an increase in unsold pre-sale homes, the government has decided to ease regulations on mid-payment loans for apartments.
It is the first time in over six years to adjust the baseline limit for interim loan payments from 900 million won or less to 1.2 billion won or less.
At the same time, it was decided to review the additional lifting of speculation overheating districts and areas subject to adjustment in November.
Minister of Land, Infrastructure and Transport Won Hee-ryong announced plans to ease regulations on real estate, such as expanding loan guarantees for interim payments, at the 11th Emergency Economy and People's Livelihood Meeting held today (27th) presided over by President Yoon Seok-yeol.
Minister Won said, "The upper limit for the mid-payment loan is too low compared to the previous increase in house prices, so we will raise it to 1.2 billion won."
Since August 2016, the government has been restricting the guarantees of mid-payment loans from the Housing and Urban Guarantee Corporation (HUG) and Korea Housing Finance Corporation (HF) to houses with a sale price of more than 900 million won in order to calm the overheating of the presale market.
If the sale price was over 900 million won, they had to pay the down payment and mid-payment, which account for about 70% of the sale price, on their own without a loan.
In the six years since the introduction of the '900 million won regulation', the average sale price of a private apartment in Seoul jumped 40% from 20 million won per 3.3 square meters to 28 million won due to the rise in house prices.
Accordingly, the government has decided to expand the loan guarantee to cover houses with a pre-sale price of 1.2 billion won or less.
We will also consider lifting the speculative overheating districts (39 places) and the areas subject to adjustment (60 places) within the next month.
Earlier, in September, 41 out of 101 areas subject to adjustment and 4 out of 43 overheated speculation areas were lifted, but after a month, we are reviewing the additional release.
The deadline for disposing of existing houses for winners of subscriptions in overheated speculation districts is extended to two years.
Currently, one homeowner who wins the subscription under the condition of disposing of the existing house must sell the house within 6 months from the date of occupancy.
Minister Won said, "The new house subscription has been won, but the duty period to sell the old house is short.
(Photo = Yonhap News)