Growing Need to Develop Public Guarantee Products for Shared Equity Homeownership
- Date 2020-08-27
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Growing Need to Develop Public Guarantee Products for Shared Equity Homeownership
- An HF report stresses a new approach to homeownership
According to Korea Housing Finance Corporation (HF, CEO Lee Jung-Hwan), the Housing Finance Research Institute released a new issue of Housing Finance Insight under the title “Equity Sharing: A New Approach to Homeownership.”
ㅇ As a strong sense of relative deprivation among non-homeowners and the subsequent spread of social discontent due to soaring home prices have gradually driven up the propensity for homeownership,
ㅇ the new issue dealt with the need to develop public guarantee products for the introduction and promotion of shared-equity homes in order to create a homebuyer-friendly environment and further diversify the types of homeownership.
Propensity for homewonership on a steady rise
ㅇ The number of households answering ‘must own a home’ has hovered above 80% in the past three years from 2017.
ㅇ There is a need to create a homebuyer-friendly environment.
- In household surveys, the average head of household is found to purchase his or her first home at the average age of 39.1 years after 11.2 years without owning a home.
- Furthermore, 63.2% of young adults and 75.1% of newlywed couples prefer the expansion of mortgage and jeonse loans as a housing support policy measure.
Shared equity homes
ㅇ As a middle ground between public rental housing and homeownership, shared equity homes, when built in dilapidated areas, will add the vitality of diversity to the current housing types and serve as a means to build an inclusive urban community.
ㅇ They offer greater stability and continuity in homeownership compared to conventional homeownership arrangements.
- They provide opportunities to accumulate wealth and reduce social exclusion.
- They raise attention on and interest in “sharing” among owners, making as much a positive contribution as full homeownership in improving local communities.
ㅇ Thus, it is necessary to explore their feasibility and promotion methods as a means of expanding the public’s right to choose housing.
Considerations for the successful introduction of a shared homeownership program
ㅇ Greater flexibility should be ensured in selecting the policy’s beneficiary households and housing types.
- The main eligibility criterion should be first-time homebuying households, not age, marital status or years of marriage, or income level, such as young adults or newlywed couples.
- Detailed implementation measures should be drafted to cover not only a build-to-rent model but also a purchase-to-rent one.
ㅇ Public guarantee products should be developed for shared-equity homes.
- A fresh point of view should be brought into developing such public guarantee products.