By Bae Eun-joo
ejbae@koreatimes.co.kr
What does home mean to you?
Most people would answer it’s a place that provides safety, security and stability for them and their families. For many Koreans, the symbolic meaning of home has long been success, investment in the future and post-retirement security. Purchasing a new home and throwing a housewarming party were huge celebratory events that meant a jumpstart to accumulating wealth. That, however, is all changing. These days, owning a home is regarded as synonymous with being in debt up to one’s eyeballs.
My home was not simply a house or a town but, more importantly an awakening story. _Chinua Achebe
Apartment prices in Seoul have skyrocketed by 56.6 percent over the past three years despite the government’s numerous measures to curb soaring housing prices focused on punitive taxation and regulations on loans.
But all is to no avail as nowhere have property prices risen as much as in Gangnam-gu, the affluent southern Seoul district. The median apartment price in the district reached 1.6 billion in June, 91.6 percent higher than the median price across the capital.
The Korean government announced last month that it will gradually provide a total of 360,000 housing units in Seoul by 2028 to stabilize the real estate market mainly by developing state-owned properties and promoting redevelopment and reconstruction projects. By easing restrictions on construction of residential buildings, the government would be able to pursue redevelopment projects to build 50-story apartment buildings in the greater Seoul area, far higher than the existing 35-story height restriction.
Tightened mortgage rules, tougher capital gains tax and other taxes on property ownership to rein in speculative investments aimed at tackling soaring home prices have now become big hurdles for home buyers of median income.
Home purchasers complain of tighter mortgage rules that prevent them from borrowing more than 40 percent of a Seoul property’s price. The maximum loan-to-value ratio falls to 20 percent for homes valued at 900 million won ($750,000) or more. And once you become a homeowner, you are subject to heavy taxes, especially if you own multiple properties. The government passed a bill recently to impose a property tax of up to 6 percent on multiple homeowners, a whopping increase from pervious 3.2 percent, and a 72 percent tax on profits from properties sold within one year of purchase.
Recently, Seoul City announced a redevelopment plan for Baeksa Village, a small cluster of ramshackle homes located on the hillside of Mount Buram in northern Seoul. Baeksa Village is one of Seoul’s last remaining “moon villages,” a term for refugee settlements built high up on mountain slopes. The inhabitants were forcefully evicted from more central areas in the 1960s and relocated to the village.
According to the Bank of Korea, property accounted for 76 percent of an average household’s estimated assets of 463 million won in 2019.
Many young people seem to have given up on the idea of ever owning a home of their own and have rather started to view “home” as a temporary shelter for a reasonable cost. Unlike the established generation who tie their lifetime achievements to owning a permanent home, the younger generations opt to satisfy themselves through gourmet foods, luxury clothing and other small gratifications which are comparatively cheaper than home ownership. A recent poll shows that over 60 percent of people in their 20s and 30s said that owning a home is unnecessary.
Recently, Seoul City announced a redevelopment plan for Baeksa Village, a small cluster of ramshackle homes located on the hillside of Mount Buram in northern Seoul. Baeksa Village is one of Seoul’s last remaining “moon villages,” a term for refugee settlements built high up on mountain slopes. The inhabitants were forcefully evicted from more central areas in the 1960s and relocated to the village.
As soon as news of the redevelopment plan spread, a real estate craze took hold of the neighborhood. Over 50 percent of the villagers have already relocated. Many of the homes are now empty, while the remaining inhabitants are almost all elderly people who rely on coal briquettes in the winter for heating.
The Seoul city plans to demolish the village by 2024 and over 2,400 high-rise apartment units are expected to be erected in their place. Concerns are rising that this moon village should be renovated without any drastic changes to the original landscape by conserving the topography of the site and maintaining the inhabitants’ customs, community and culture.
Credits:
Korea Times photos by Shim Hyun-chul/ Choi Won-suk