August 13 Real Estate Measures Announced: Easing Loan Burden for Genuine Demand, Expanding Housing Supply in Capital Area

New real estate measures were announced yesterday. The main goals of these measures are to reduce the loan burden on genuine homebuyers and increase housing supply in the Seoul metropolitan area. Through this, the government plans to stabilize the housing market and ensure housing stability for ordinary citizens.

The specific details of the policy consist of expanding loan capacity for genuine homebuyers, supporting home purchases for young people and newlyweds, and increasing housing supply in the Seoul metropolitan area.

The government has increased the household loan growth target from 1.5% last year to 3% this year. Considering that household loans in the financial sector are approximately 1,800 trillion won, this expands the existing loan capacity from about 30 trillion won to 60 trillion won, creating an additional loan capacity of about 30 trillion won.

This relaxation of total loan regulations is expected to have a positive impact, especially on genuine homebuyers in the housing market.

The main reason for this relaxation of total loan regulations is the expected significant increase in demand for new apartment move-ins and redevelopment/reconstruction relocation in the second half of the year. The government aims to proactively respond to this increase in demand to reduce inconvenience in accessing loans.

This is intended to support smooth capital flow in the housing market and help genuine homebuyers acquire homes.

The government emphasizes that the prioritized recipients of the additional 30 trillion won in loans are genuine homebuyers. In particular, it supports securing funds necessary for the actual housing supply process, such as down payments and balance payments for new apartments, and relocation expenses during reconstruction or redevelopment. Furthermore, the policy is to prioritize loan capacity for genuine homebuyers such as young people and first-time homebuyers.

This demonstrates the government's commitment to curbing speculative demand while ensuring that funds are smoothly supplied to those who genuinely need them.

In January next year, the 'Youth Future Bokgeumjari Loan' will be newly implemented. This product will apply a Loan-to-Value (LTV) ratio of up to 80% for young people under 39 with annual incomes of 70 million won or less who purchase non-apartment homes (villas, multi-household homes, detached houses, officetels, etc.) under 400 million won (with a net floor area of 85 square meters or less).

Additionally, it will offer preferential interest rates of around 3% to actively support young people in buying their own homes.

To alleviate the so-called 'marriage penalty' for newlyweds, policy loan income criteria will be changed. Previously, newlyweds within 7 years of marriage had to have a combined annual income of 85 million won or less to be eligible for policy loans. Now, the threshold has been lowered, allowing couples to receive loans if one spouse's income does not exceed individual upper limits of 70 million won, 60 million won, 50 million won, etc.

This measure aims to address the issue of loan eligibility being revoked due to marriage and support home purchases for newlyweds.

Some exceptions will be applied to the jeonse loan restrictions for non-resident single homeowners. If there is even one history of resident registration at the apartment, a loan can be obtained, and exceptional application is possible through a change of address within the year before the policy implementation date in January next year.

Furthermore, if a house with a tenant was purchased, or until the existing tenant's contract ends, the current jeonse loan can be maintained. This is to minimize confusion caused by sudden regulations.

Concerns about potential loopholes regarding jeonse loan restrictions, set to take effect in January next year, have been raised. There is a possibility that attempts may be made to utilize exception clauses by changing addresses before the system is implemented. Given the large scale of loans, it is pointed out that the possibility of resorting to illegal methods to avoid regulations cannot be ruled out.

Opinions suggest that discussions are needed on the criteria for determining actual residency and preventing illicit practices.

There are 60,000 jeonse loans, amounting to approximately 9.3 trillion won, held by homeowners in regulated areas of the Seoul metropolitan area. Concerns are raised that the relaxation of jeonse loan regulations could cause a ripple effect in the existing jeonse market. A single homeowner who lives in a jeonse in another area and rents out their own home might try to move back into their own home if they cannot receive a jeonse loan.

In this scenario, they would ask the existing tenant to vacate, and that tenant would then have to find another home, which could destabilize jeonse supply and demand.

The jeonse loan guarantee ratio in regulated areas of the Seoul metropolitan area will be adjusted downwards by 10 percentage points to 70%. This means that if guarantee institutions like the Korea Housing Finance Corporation (KHFC) lower the guarantee ratio, the amount banks have to bear in case of default or other non-performing loans increases.

Therefore, it is expected that banks will likely conduct jeonse loan assessments more conservatively.

The core goal of these financial measures is not to allow more loans, but to relieve genuine homebuyers who were unable to get loans due to banks' total quota limits, despite being eligible. The key is whether the newly secured 30 trillion won in loan capacity can genuinely reach genuine homebuyers without stimulating housing prices.

The government plans to thoroughly manage these funds to ensure they benefit those who truly need them, without causing speculative overheating in the real estate market.

The government is pursuing plans to解除 greenbelts and utilize idle sites to expand housing supply in the Seoul metropolitan area. Through this, it plans to supply an additional 230,000 homes. This volume is new supply added to the 1.35 million homes planned for the Seoul metropolitan area in two previously announced supply measures.

Approximately 100,000 of the additional 230,000 homes are expected to be developed as new public housing districts. This is expected to contribute to alleviating housing shortages in the Seoul metropolitan area.

The government has decided to significantly accelerate the construction start dates for previously announced housing sites. For example, the Yongsan International Business District, which was part of the supply measures announced in January, already had its construction start date moved up to 2028. Places like Taereung Golf Course in Nowon-gu and Gwacheon Racecourse in Gyeonggi Province also had their construction start dates moved up by one year to 2029. This reflects a commitment to resolve market instability through rapid housing supply.

Furthermore, the government announced that the time taken from major housing sites like the 3rd new towns to the start of construction will be shortened from the current more than 5 years (approx. 60 months) to 37 months, reducing it to just over 3 years. This is to significantly shorten the housing supply period and deliver tangible supply effects that people can feel.

Chinese memory company Yangtze Memory Technologies Corp (YMTC) has entered the top 3 globally in the NAND market for the first time by shipment volume. YMTC surged to account for 14% of global NAND shipments in Q2 this year. This is a significant indicator showing the growth trend of Chinese semiconductor companies amidst US-China tech rivalry.

YMTC, a relatively new company founded in 2016, has grown rapidly with full support from the Chinese government. It has particularly focused on securing technological capabilities in NAND flash, expanding its presence in the global market. This achievement is expected to have a significant impact on the competitive landscape of the global NAND market in the future.

While YMTC ranked 3rd in the NAND market by volume, it held a relatively lower position by revenue. This is because it has a low proportion of high-performance products for data centers, which have higher margins, and primarily sells lower-cost consumer products. Therefore, in terms of revenue, it lags behind Micron, which ranks 3rd or 4th, remaining at around 5th place.

This suggests that YMTC is still focused on the mid-to-low-end market rather than the high-value market, and there remains a gap with leading companies in terms of technology and profitability. However, increasing volume can serve as a foundation for future market share growth.

While DRAM requires highly complex extreme ultraviolet (EUV) equipment, NAND can be sufficiently produced through indirect methods without EUV equipment. This is cited as a factor enabling YMTC's rapid catch-up. Thanks to these technological characteristics, Chinese companies have been able to enter and grow in the NAND sector more quickly.

YMTC has recently begun preparing for an IPO to secure large-scale capital, and industry consensus suggests that this funding could shake up the global semiconductor market. This indicates that China's efforts towards technological self-reliance are achieving some success, even amidst Western semiconductor regulations against China.

The government is pursuing a plan to create a new 'regional adjustment charge' item in the industrial electricity tariff system, which would further discount electricity bills depending on the region. Industrial electricity tariffs consist of various items such as a basic rate (fixed charge for the power grid), energy charge, and fuel cost adjustment charge. By adding a regional adjustment charge, the government aims to provide discount benefits based on where a factory is located.

However, the discount rate and application method may change during the finalization process. This is interpreted as reflecting the government's policy will to attract local investment and achieve balanced regional development.

The biggest issue with industrial electricity tariff reduction is the funding plan. Industry estimates suggest that this could reduce Korea Electric Power Corporation (KEPCO)'s annual revenue by approximately 2 trillion won. As KEPCO would find it difficult to bear this loss directly, one currently discussed method is to raise funds by lowering the purchase price KEPCO pays to private power generators for electricity.

This would effectively transfer the burden to private power companies, and if power companies cannot sufficiently reduce costs, they would have to cover losses from elsewhere, leading to concerns that rates might ultimately increase. Among experts, there is agreement on the need to attract advanced industries to local areas, but some also point out that the government should directly inject fiscal funds for a certain period.

On the 13th local time, all three major New York stock indices rose. This is attributed to signs of easing inflation pressure in the United States.

Expectations of easing inflation seem to have improved investor sentiment, positively impacting the overall stock market.

Today, Friday, there will be scattered showers across the country.