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.