Record High of First-Time Homebuyers in Seoul Amid Housing Market Turmoil

The proportion of first-time homebuyers in Seoul has reached an all-time high. This surge is attributed to rising rental prices, increasing home values, and concerns over supply shortages, particularly among buyers in their 30s who are increasingly relying on loans to purchase homes.

According to data from the Supreme Court's registration information portal, the number of registrations for first-time buyers of multi-family homes in Seoul reached 9,343 in August, a 16.7% increase from 8,006 in the previous month. This marks the highest level since August 2020, when there were 12,318 registrations.

The share of first-time buyers in total transactions also hit a record high. Last month, first-time buyers accounted for 53.8% of the 17,371 total registrations for multi-family home sales in Seoul, the highest percentage since the Supreme Court began releasing related data in January 2010. This means that more than one in two multi-family homes sold in Seoul was purchased by a first-time buyer.

This figure surpasses the levels seen during the housing market boom in 2020. Even in August 2020, when first-time purchases exceeded 10,000, the share of first-time buyers was only 40.3% of the total 25,396 transactions.

The increase in first-time buyers is believed to be influenced by the designation of all areas in Seoul as regulated zones following the October 15 measures last year, along with the expansion of land transaction permit zones. This has led to a rise in purchases among younger buyers who can access policy loans. First-time homebuyers can benefit from loans with a loan-to-value ratio (LTV) of up to 80% even in regulated areas through programs like the Didirimdol loan.

Notably, buyers in their 30s have shown a significant increase in activity. Last month, 4,855 first-time purchases of multi-family homes were made by buyers in their 30s, accounting for 52% of all first-time transactions. In contrast, buyers in their 40s made 2,419 purchases, roughly half that of the 30s cohort.

The proportion of first-time buyers has been steadily increasing this year. From January to August, there were 120,485 transactions of multi-family homes in Seoul, with 57,416 being first-time purchases, representing 47.7%. This is a notable increase of 9.8 percentage points from 37.9% during the same period last year, with the number of purchases rising significantly from 39,728.

Market analysts point to a combination of a shortage of new apartment supply, rising rental prices for mid- to low-priced homes, and concerns over increasing home prices as factors driving the resurgence of so-called 'young buyers' in the market.

The high dependency on loans among buyers in their 30s further supports this trend. According to a funding plan submitted by the Ministry of Land, Infrastructure and Transport to Kim Jong-yang, a member of the National Assembly's Land, Infrastructure and Transport Committee, from February 10 to the end of July, the total amount spent by buyers in their 30s was approximately 39.6 trillion won, accounting for 37% of the total 106.9 trillion won spent across all age groups, the highest among all demographics.

Of this, the amount financed through loans from financial institutions was 15.9 trillion won, representing 40.1% of the total spending by buyers in their 30s. This is higher than the 25.1% for buyers in their 40s and 14.5% for those in their 50s. During the same period, loans taken out by buyers in their 30s accounted for about 56% of the total 28.4 trillion won in loans across all age groups.

Buyers in their 30s tend to have relatively less personal capital, with the proportion of funds from property sales at only 18.7%, compared to 37.8% for buyers in their 40s and 43.1% for those in their 50s, indicating a higher reliance on loans during the home purchasing process.