Buying a Home for 25% of the Price... Public Housing with Equity Accumulation on the Way

The Korea Land and Housing Corporation (LH) is set to introduce its first equity-accumulation public housing in Goyang Changneung this coming December, allowing homebuyers to move in by paying 25% of the housing price and acquire the remaining shares over a 20-year period.

The government plans to supply a portion of LH public housing through equity-accumulation and profit-sharing Type II models to lower initial financial burdens and help genuine homebuyers, including young adults, purchase their own homes.

The initial supply consists of 284 units out of 1,057 units in the S-2 block of Goyang Changneung.

Under the equity-accumulation model, buyers acquire 25% of the equity by the time of move-in and purchase the rest in five installments of 15% every four years. The price for acquiring additional equity reflects the initial sale price plus period interest.

A separate rent must be paid for the unacquired shares. The Ministry of Land, Infrastructure and Transport explained that based on an introductory model assuming a sale price of 510 million won and a neighboring jeonse (lump-sum deposit) market price of 400 million won, an initial equity acquisition would require about 128 million won, and if the rent is paid entirely as monthly rent, it would be around 790,000 won per month.

While equity acquisition is mandatory, a deferral of up to one year is permitted considering economic conditions, with a 10-year resale restriction and a 5-year mandatory residency requirement.

Under the profit-sharing Type II model, buyers are required to take out a low-interest loan from the National Housing Fund for up to 70% of the sale price—capped at 500 million won—and share the capital gains with the fund based on the average loan balance ratio when selling the house or repaying the loan.

The loan interest rate is set 1 percentage point lower than the basic rate for the Didimdol Loan, with up to an additional 0.5 percentage point preferential rate applied.

Unlike the existing sharing model, which restricts resales exclusively to public operators like LH, the profit-sharing Type II model allows sales on the market after the resale restriction period expires, and capital gains settlements can be completed through loan repayment even without selling the house.

The Ministry of Land, Infrastructure and Transport plans to include public housing complexes with lowered initial financial burdens in LH's housing supply plan for next year, which will be announced within the year.

Reported by Son Hyeong-an | Video by Na Hong-hee | Design by Lee Jeong-ju | Produced by SBS Digital News
※ Please note: This article was translated by AI and may contain errors.