"I'll Pay Only 25% With My Own Money"... Who Covers the Rest for Homebuyers in Their 20s?

It has been revealed that people in their 20s and 30s purchasing homes in Seoul are increasingly relying on external funds, such as gifts from parents, rather than money they have saved themselves.

An analysis of the "Financing Plans" (excluding foreigners and corporations) released by the Ministry of Land, Infrastructure and Transport shows that for homebuyers in their 20s purchasing homes in Seoul for their own residence, the proportion of self-funded capital (from savings, stocks, or bond sales) relative to the total purchase price fell from 29.6% in the first quarter of last year to 27.1% in the first quarter of this year. It dropped further to 24.9% during April and May of this year, the latest period for which data is available.

Conversely, the proportion of external funds—which includes gifts, inheritances, and other loans—rose from 15.1% to 22.9% during the same period, reaching 23.6% in April and May of this year.

The gap between self-funded capital and external funds narrowed from 14.5 percentage points in the first quarter of last year to 1.3 percentage points in April and May of this year, meaning the proportions of self-funded and external capital have become virtually identical.

For those in their 30s, the gap between self-funded capital and external funds also narrowed from 8 percentage points in the first quarter of last year to 4.7 percentage points in April and May of this year.

The increase in the proportion of external funds is due to a rise in private loans.

The proportion of "other loans," which refers to transactions between individuals, nearly doubled for both those in their 20s and 30s over the past year.

Under current tax law, even if one borrows money from parents, gift tax can be avoided if a loan agreement is drafted applying the legal interest rate of 4.6% per year and the interest is actually paid.

While the National Tax Service may deem such transactions as gifts if the annual interest amount exceeds what the child can realistically afford, it is difficult to verify whether interest is actually paid in the countless number of private financial transactions, leading to persistent concerns about potential tax evasion through disguised gifts.

Experts analyzed, "The structure where housing purchases by the younger generation rely more heavily on asset transfers from parents than on earned income is becoming increasingly clear," adding, "If this trend continues alongside the easing of gift taxes, the wealth gap between the parent generation could be further intensified as it is passed down to the next generation."

Reported by Kim Taewon | Video by Lee Ui-seon | Graphics by Lee Soo-min | Produced by SBS Digital News
※ Please note: This article was translated by AI and may contain errors.