Samsung Electronics will implement an in-house housing loan starting Sept. 1 that lends up to 500 million won to employees without homes at an annual interest rate of 1.5%. As purchase inquiries from employees continue in southern Gyeonggi areas such as Dongtan and Bundang, where Samsung Electronics business sites are concentrated, some say the low-interest funds could spur buying not only there but also in southeastern Seoul.
According to the industry on the 25th, Samsung Electronics will implement a "housing stability loan" for employees without homes starting next month. When it opened an in-house loan page on the 19th detailing specific application requirements and operating plans, hundreds of inquiries were reportedly posted on the bulletin board that day.
Samsung Electronics decided to introduce an in-house housing loan system through a labor-management wage agreement on May 27. In the Seoul metropolitan area and six metropolitan cities, employees can borrow up to 500 million won when buying dwellings such as apartments and officetels priced at 2.5 billion won or less with an exclusive area of 85 square meters or less. The applicable interest rate is 1.5% per year. The interest rate differential borne by the company is included in the employee's earned income and taxed.
Both the employee and spouse must be without a home to receive the loan. However, switching by selling the existing home and buying a new one on the same day is allowed. Contracts signed on or after May 27 are the principle targets for support. Even for earlier contracts, applications are possible if the closing date is on or after Sept. 1.
The financial sector's debt service ratio (DSR) regulation does not directly apply to the in-house loan itself. Instead, Samsung Electronics sets a first-priority maximum mortgage at about 110% of the loan amount. As a result, after taking the in-house loan, the amount of any additional mortgage loan available from banks may be reduced.
The housing market in southern Gyeonggi near Samsung Electronics' Pyeongtaek, Hwaseong and Giheung campuses is already strong. Representative areas include Bundang in Seongnam; Suji and Giheung in Yongin; Yeongtong in Suwon; and Dongtan District in Hwaseong.
An official at a real estate agency in Bundang District said, "Since May, sales inquiries from Samsung Electronics employees have been coming in steadily," adding, "Multiple contracts have been signed by Samsung Electronics employees in Sunae-dong and Seohyeon-dong, which have many apartments priced at 2.5 billion won or less and are leading redevelopment districts."
An analysis of the Korea Real Estate Board (REB) weekly apartment price index shows that from May 25 to Aug. 17, apartment prices in Dongtan District rose 11.33%. During the same period, Bundang District gained 5.37%, Jungwon District in Seongnam rose 5.31%, and Yeongtong District in Suwon increased 5.29%. The overall rise in the Seoul metropolitan area was 2.21%, while non-capital regions rose 0.06%.
In the market, as home prices in southern Gyeonggi surge, some demand may shift to southeastern Seoul and the Han River area. Nam Hyeok-woo of Woori Bank's real estate research institute said, "As home prices in southern Gyeonggi jump sharply in a short time, some parts of Seoul may appear relatively less expensive," adding, "There is a possibility of switching demand flowing into districts such as Gangdong, Songpa and Dongjak."
An official at a real estate agency in Gangdong District said, "In addition to Samsung Electronics, we are also getting sales inquiries from employees at the SK hynix Icheon campus," adding, "We expect transactions to increase from the fall moving season through early next year, when major corporations' performance bonuses are paid."