Young people in South Korea are struggling with homeownership due to soaring housing prices. Eight out of 10 in their 20s and 30s end up renting, as affording a home would mean saving for 15 years without spending any salary. Thus, the gap between those with parental support and those without is widening. ChosunBiz investigated to understand the challenges and explore potential solutions for young people. [Editor’s Note]
The ‘2022 Korea Housing Survey’ by the Ministry of Land, Infrastructure, and Transport highlights significant trends in the housing choices of young adults. Among those who previously lived in jeonse (a unique Korean rental system where tenants provide a substantial deposit instead of monthly fees) homes, 14.0% opted for the same system in their recent moves. Meanwhile, for those with previous monthly rentals, a substantial majority (44.4%) continued with monthly rentals, indicating a pattern of maintaining similar housing levels after contract expirations. The upward mobility rate for young households was 20.3%, comparatively lower than the general households’ rate of 28.6%.
Additionally, young households saw a notable shift in housing situations, with 4.6% transitioning from homeownership to jeonse or moving from jeonse to monthly rentals. This shift suggests that the rise in housing prices is leading more young individuals to choose renting, whether through jeonse or monthly arrangements. In 2022, the rate of young households living in rental properties reached a high of 82.5%, the highest since 2018, while the homeownership rate remained at 13.2%.
Faced with the prospect of further increases in home prices, young individuals are resorting to loans to facilitate home purchases. According to ‘Korean Social Trends 2023′ by Statistics Korea, 11.8% of the total young population, or 1,766,000 individuals, own homes. The median loan balance among them, at 141.5 million won, exceeds that of middle-aged and elderly populations who own homes, signaling increased debt among young homeowners.
Thus, debt is on the rise among the younger generation, with households aged 20 and below experiencing a 93.5% growth in debt between 2018 and 2021. Similarly, individuals in their 30s saw a significant increase of 39.8%. In contrast, the debt increase rate for those in their 40s to 50s was limited to 22.0%, highlighting the rapid escalation of debt specifically among the younger age group.
With limited support from parents, only the younger generation capable of receiving such assistance finds it relatively easy to purchase a home. According to the ‘2022 Youth Life Survey’ by the Office for Government Policy Coordination and the Korea Institute for Health and Social Affairs (KIHASA), 63.7% of surveyed young individuals receive financial support from their parents when buying a house or securing a deposit. Kim Moon-kil, a KIHASA research fellow, emphasized the increasing cost of residing in a self-owned home for youth, revealing challenges in achieving stable occupancy without parental support or loans.
Given the constraints in parental support, about half of young households feel the need for government housing assistance policies. According to the Youth Life Survey, 55.6% of the younger generation expressed the necessity for government support. In expensive metropolitan areas, this sentiment increased to 68.5% among young households.
Young households identified ‘Support for Jeonse Loans’ (38.3%) as the most crucial housing assistance program, followed by ‘Rental Subsidies’ (22.1%) and ‘Support for Home Purchase Loans’ (20.3%). Regional differences emerged, with young individuals in metropolitan areas prioritizing ‘Rental Subsidies’ (23.8%) as the second preference, while those in non-metropolitan areas favored ‘Support for Home Purchase Loans’ (23.7%).
