As Home Prices Rise, Only 'Cash-Rich' Buyers Purchase; Seoul Mortgage Ratio Drops 7.3%p

*Editor's Note: 'AI PRISM' (Personalized Report & Insight Summarizing Media) is an 'AI-based customized news recommendation and summary service' developed with support from the Korea Press Foundation. It selects and provides six customized news items by reader type.

1. As Home Prices Rise, Only 'Cash-Rich' Buyers Purchase; Homeless Say "Loan Regulations Must Be Eased"

Key Summary: In Seoul strata property transactions, the maximum bond claim ratio fell 7.29 percentage points in one year, from 52.97% in June last year to 45.67% in June this year. The decline was pronounced in districts with large price gains, such as Seongdong-gu (-14.89%p), Dongjak-gu (-15.16%p), and Gangdong-gu (-11.80%p), while the drop was even larger in high-priced apartment clusters such as Ichon-dong (-20.36%p) and Sincheon-dong (-19.63%p). This is a result of the government's June 27 and October 15 measures, which differentiated metropolitan-area mortgage limits by price at 600 million, 400 million, and 200 million won, creating a structure in which a buyer purchasing a 2 billion won home must raise at least 1.6 billion won in their own funds. Ko Jun-seok, a professor at Yonsei University's Sangnam Institute of Management, noted, "The situation is such that home ownership becomes advantageous only for those who receive gifts or have the ability to raise cash," adding, "With mortgage interest rates approaching 8% as well, it is becoming a difficult market for homeless end-users."

2. 70 Seoul Redevelopment Zones Approved but Unable to Break Ground

Key Summary: According to redevelopment progress data compiled by the Seoul Metropolitan Government, 70 out of a total of 472 zones have received management and disposal plan approval but have yet to break ground, while only 60 zones (12.7%) have completed construction starts. By type, housing-redevelopment-style redevelopment accounted for 23 zones and urban-redevelopment-style redevelopment for 21 zones, showing a high proportion of stagnation in redevelopment zones. Seoul's cumulative apartment construction starts from January to May totaled 6,615 units, down 25.3% from the same period a year earlier, and observers point out that conflicts over recalculating construction costs due to rising raw material and labor costs, along with mandatory rental housing ratios and the reconstruction excess profit recapture burden, are dragging down project viability. Although the government has signaled measures to accelerate supply this month, including the announcement of urban complex project candidate sites, assessments suggest the gap with conditions on the ground remains.

3. Mandatory 10% Non-Residential Facility Construction; Funding Blocked by PF Soundness Management

Key Summary: A combination of regulations—including the mandatory 10% non-residential facility rule in commercial areas, PF fund crunches, relocation loan regulations, mandatory rental housing ratios, the reconstruction excess profit recapture levy, and restrictions on transferring member status—is squeezing redevelopment project sites. Some 75% (12 sites) of unbuilt residential facilities in Seoul are stalled due to funding problems, and in areas such as Noryangjin District 1 in Dongjak-gu and Cheongnyangni District 8 in Dongdaemun-gu, relocation schedules are being delayed by non-payment of relocation loans. The Seoul Metropolitan Government has responded with 18 billion won in redevelopment project loan support and the allocation of 50 billion won in a housing promotion fund, but experts assess these measures as insufficient. The Financial Services Commission (FSC) is reviewing measures to improve redevelopment-related loan regulations based on proposals from the Ministry of Land, Infrastructure and Transport (MOLIT), and there is talk that related content may be included in a comprehensive real estate measure scheduled for announcement next month.

4. [Exclusive] IBK Halts Variable-Rate Mortgages; Lending 'Shutdown' Spreads Across the Board

Key Summary: Industrial Bank of Korea (IBK) fully halted new variable-rate mortgage offerings through its branches from the previous day, extending the lending crunch to state-run banks. As of the 15th, the increase in household loans at the five major banks was 4.68 trillion won, already exceeding the annual target (4.33 trillion won). Thresholds are rising across commercial banks, with KB Kookmin Bank uniformly limiting its mortgage cap to 300 million won and Woori Bank cutting its monthly per-branch offering limit from 3 billion won to 1 billion won. The Financial Services Commission (FSC) plans to decide whether to ease loan regulations based on opinions gathered at a real estate grand debate on the 23rd, but the market's assessment is that its room for maneuver is not large.

5. Housing Market Value Rose 8% Last Year on Surging Home Prices, Largest Since 2021

Key Summary: According to the '2025 National Balance Sheet (preliminary)' released by the Bank of Korea, the total market value of housing at the end of last year rose 8% (571 trillion won) from the end of the previous year to 7,710 trillion won, the largest increase since 2021 (18.3%). By region, Seoul accounted for 37% of the total at 2,894 trillion won, followed by Gyeonggi (2,192 trillion won), Busan (398 trillion won), and Incheon (341 trillion won). The total market value of land at the end of last year (12,660 trillion won) and real estate assets (17,836 trillion won) also recorded the largest increases since 2021, and the proportion of real estate in non-financial assets rose to 76.6%.

6. Parent-Child Sales Must Prove Payment; Using Them as a Gift Method Brings a 'Tax Bomb'

Key Summary: After President Lee Jae-myung and his wife's method of selling their Bundang apartment via a mortgage came to light, moves to use this method in home transactions between parents and children emerged online, but under tax law, taxpayers must directly prove that an actual sale took place. Unless the child's repayment ability and actual payment of principal and interest are backed up, a gift tax of about 397.7 million won and acquisition tax (up to about 388.6 million won when heavily taxed) are levied on the unpaid balance, creating a structure in which one pays up to 685 million won more compared to a normal sale. The National Tax Service explains that it closely verifies the source of the sale price and interest, repayment ability of the principal, and whether repayment actually occurred through the child's income, assets, and account records.