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| Apartment complexes are seen near the Han River in Seoul in this file photo taken on Jan. 5. Yonhap |
By Lee Min-hyung
Fewer people in their 20s and 30s purchased apartments here last year amid the steeply rising interest rates and falling housing prices, in an unexpected twist for the age groups who drove a panic buying spree between 2020 and 2021.
According to data from Korea Real Estate Board, the two age groups accounted for only 28.4 percent of those who purchased apartments nationwide for the first 11 months of 2022. This figure is a drop of 2.6 percentage points from 2021, when the figure reached 31 percent.
In Seoul, those in the young age bracket accounted for 34.1 percent of the total number of apartment purchases between January and November last year. This is a drastic decline compared to 41.7 percent in 2021.
Housing market sentiment took a rapid turn for the worse in 2022 in the wake of the U.S. Fed's aggressive rate hikes. Households' interest burden has since soared at an alarming pace, after the Bank of Korea took the similar step of steeply increasing the key rate to 3.25 percent from 1.25 percent in January 2022.
This decision ended up freezing the housing market, with the number of apartment transactions falling to a record low level. In December 2022, Seoul's apartment transaction volume came in at 578, down by about 50 percent from the previous year, according to data from Seoul Real Estate Information Square.
Other data from five major banks here ― KB, Shinhan, Hana, Woori and NongHyup ― showed Tuesday that their average mortgage rates moved within a band of 5.47 and 8.11 percent. This was the first time in 14 years since the 2008 global financial crisis that the upper limit of the rate topped 8 percent.
A 30-something office worker surnamed Kim spoke of his growing financial burden when extending his mortgage.
"I took out a loan worth 400 million won with a variable rate to purchase a home in Seoul in 2021," he said. "When I have extended the loan every six months, I have had to pay much more in interest payments. I am just waiting for the end of the ongoing rate hike cycle, even if I have to face a tough financial burden for a couple of more years to come."
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