"We will apply the debt service ratio (DSR) that takes into account the future income of young people." (Campaign pledge by presidential candidate Lee Jae-myung)
"The state will take responsibility for the basic housing of the 2040 generation." (General election platform of the Democratic Party of Korea, Mar. 2024)
Since this administration took office, two major real estate measures have been announced, but critics say it is hard to find plans to stabilize housing for people in their 20s and 30s. Contrary to President Lee Jae-myung's campaign pledge to ease the debt service ratio (DSR) for young people, the June 27 measures sharply reduced the loan limits for policy funds primarily used by the young. The 2024 general election platform of the ruling Democratic Party of Korea also contained numerous plans for the young, but none have yet been reflected in policy.
According to the Ministry of Land, Infrastructure and Transport and the real estate industry on the 18th, the ministry significantly reduced loan limits for policy funds mainly used by young people and newlyweds in the June 27 measures. The limit for the Didimdol loan, available for first-time dwelling purchases, was lowered from 250 million won to 200 million won. For newlyweds, it was reduced from 400 million won to 320 million won, and for families with newborns, from 500 million won to 400 million won.
For the Butimok loan, which supports jeonse funds for low-income households, the first-time limit was cut from 200 million won to 150 million won; for newlyweds in the Seoul metropolitan area, from 300 million won to 250 million won; and for newborns, from 300 million won to 240 million won.
As a result, the volume of new policy-fund loans is falling sharply. According to data the ministry submitted to Rep. Lee Jong-bae of the People Power Party, the volume of newly supplied Didimdol loans funded by banks in July and August this year averaged 1.5726 trillion won per month. That is a steep drop compared with the monthly average of 2.1654 trillion won in the first quarter and 1.8612 trillion won in the second quarter this year.
Butimok loans are also on the decline. The newly supplied Butimok loans in July and August this year averaged 1.0129 trillion won per month. In the first and second quarters this year, they were 1.5266 trillion won and 1.2528 trillion won, respectively.
This stance is largely at odds with what President Lee Jae-myung pledged during his candidacy. During the last presidential race, Lee cited easing the DSR for young people as a pledge. He said he would apply a DSR that takes into account future income, given that current income for young people is low.
The ruling party has also yet to mention the housing stabilization plans for young people that it fleshed out during last year's general election. In its general election platform released in Mar. 2024, the Democratic Party of Korea said it would make the state responsible for "the basic housing of the 2040 generation." It also said it would "expand the housing support eligibility for newlyweds to those in their 10th year of marriage."
It also said it would supply 250,000 half-price apartments for young people and newlyweds and develop products that allow "buying a home first and repaying principal and interest later," including a 10-year repayment plan after first-time home purchase.
Contrary to what the government and ruling party previously mentioned, housing stabilization policies for the young are being reduced or left out of discussions, fueling their frustration. A newlywed surnamed Oh (female, 34), who lives in Yongsan District, Seoul, said, "Considering the commute, we found a jeonse in Seoul for now, but I am very worried about housing going forward," adding, "For newlyweds, even 10 million to 20 million won can swing whether we can buy a home and our residential stability, so the sharp cut in policy loan limits feels like a bolt from the blue."
Park Hap-soo, an adjunct professor at Konkuk University's Graduate School of Real Estate, said, "From a policy perspective, first-time employees and newlyweds are groups that need continuous protection," adding, "With marriage and childbirth closely linked to housing issues, concrete mentions on the supply side and consistency in policy are needed so that young people can plan their future."