Young Koreans' 1st-home buying hits 5-year high as Seoul rents soar

Listings for "officetel," or a hybrid commercial and residential building, are posted at a real estate agency in Seoul's Eunpyeong District, Aug. 13. Yonhap

First-time home purchases by people in their 20s and 30s hit a nearly five-year high in Seoul in July, as rising “jeonse” rental costs and relatively accessible mortgage financing encouraged more young renters to enter the housing market, government data showed Wednesday.

According to the Supreme Court’s real estate registration data, 7,547 first-home purchases were recorded in the capital city last month, the highest monthly figure since November 2021.

Buyers in their 20s accounted for 887 transactions, or 11.8 percent of the total, while those in their 30s accounted for 4,300, or 57 percent.

The surge comes as jeonse costs continue to rise. Under the uniquely Korean rental system, tenants pay a large lump-sum deposit instead of monthly rent. The apartment jeonse price index in Seoul rose to 104.39 in June from 100 at the start of the year, according to the Korea Real Estate Board.

The rising jeonse deposits can make buying comparatively attractive for young eligible renters, particularly when policy-backed loans lower their upfront financing barrier.

Eunpyeong recorded the most purchases among the capital’s 25 districts, with 841 transactions. Its relatively affordable housing and convenient access to the city center have made it a popular entry point for buyers.

It was followed by Nowon, Gangseo, Songpa, Seongbuk and Guro. Most are similarly accessible markets, with a high share of transactions below 1 billion won ($708,000).

Songpa, one of the city’s pricier districts, was the outlier, with a significant share of transactions in the 2.5 billion to 4 billion won range.

Analysts expect demand from buyers in their 20s and 30s to remain strong for the time being, buoyed by expanded policy financing for young people, including the new Youth Future Bogeumjari Loan for first-time buyers aged 39 and under, as well as the financial authorities’ decision to raise banks’ annual household loan growth cap from 1.5 percent to 3 percent.