Seoul apartments, special loans for newborns boost transactions under 900 million won

A banner is displayed at Woori Bank's headquarters in Jung-gu, Seoul, on the afternoon of the first day of application for a special housing loan for newborns, which lends money to buy a home at interest rates as low as 1 percent. (Woori Bank)

The impact of the special loan program for newborns on Seoul's apartment market is leading to an increase in transactions of apartments priced below 900 million KRW.

Amid the recent decline in apartment prices, the influence of this loan program has resulted in a higher proportion of transactions for apartments under 900 million KRW. According to data from the Seoul Real Estate Information Plaza and the Ministry of Land, Infrastructure, and Transport, 954 of the apartment transactions reported in Seoul in February were for apartments priced under 900 million KRW, accounting for 57.7% of the total transactions. This is an increase of 2.6 percentage points from January.

By March, the proportion of transactions for apartments under 900 million KRW had risen to 70.1%.

The real estate industry attributes the increase in transactions of apartments under 900 million KRW to the combined effect of the special loan program for newborns, which was implemented in January of this year, and the recent decline in apartment prices. This special loan program allows for loan applications within two years of childbirth or adoption, for apartments priced under 900 million KRW and with a floor area of 85 square meters or less.

Ham Young-jin, head of Woori Bank's Asset Management Consulting Center, explained, "With the price adjustment effect, there is growing demand for purchasing homes under 900 million KRW utilizing policy finance."

Additionally, the number of bidders for apartments under 900 million KRW in the auction market is also increasing, reflecting the high demand in the market.