An aerial view of an apartment complex in Seoul (Yonhap)
A growing number of South Koreans under the age of 10 have purchased apartments with financial support from their parents, a lawmaker said Oct. 4, raising concerns over real estate speculation and financial misconduct.
The number of apartment purchases by children under 10 totaled 552 from September 2017 to last month, and their combined value amounted to 104.7 billion won ($88.2 million), according to data from the Ministry of Land, Infrastructure and Transport submitted to Rep. Kim Hoi-jae of the ruling Democratic Party of Korea.
The young homeowners’ parents appeared to have transferred financial assets to their children to buy the apartments as part of a “gap investment” strategy, Kim said.
This involves purchasing homes with “jeonse” tenants, who pay large lump-sum deposits in lieu of monthly rent.
Using a jeonse deposit, a gap investor can buy a home with a modest down payment -- the difference between the deposit and the price of the home.
More than 80 percent of the apartment purchases in the analysis involved rental homes. Nearly 67 percent were financed by rental deposits paid to the young landlords’ parents. Those backed by inherited cash accounted for 59 percent, data showed.
Apartments sold to 8-year-old children were worth a combined 18.2 billion won, while the corresponding figures were 18.19 billion won for 9-year-olds and 12.8 billion won for 7-year-olds.
“Real estate speculation among young South Koreans is widening inequality of assets and wealth. Calls are rising for tougher measures to supervise any possible illegal inheritance for speculative purposes,” Kim said.
By Choi Jae-hee (firstname.lastname@example.org)