The percentage of house poverty households among single-person, 20-34-year-old households in Seoul has risen to 34.0% in 2005, 36.3% in 2010, from 37.2% in 2015. It means housing poverty is being a serious social problem for young people. The reason why housing poverty among young people is more serious than among other age group is because they are economically active people who will lead the future of Korea. If their housing problems are not solved, many socioeconomic problems such as elderly support and population decline could be follow. Now, government has to solve the youth housing problem, with long-term solution that young people can experience real estate ownership or investment, and prepare future, in addition to the supply of rental housing that can only solve imminent matter.
The circumstances and causes of poverty in youth housing.
Based on Article 17 of the Framework Act on Housing and Article 12 of the Enforcement Decree of the same Act, Korea sets minimum housing standards necessary for the people to live a pleasant and livable life. According to this, houses must have a kitchen, toilet, and bath facility equipped with water and sewage facilities, and meet the minimum residential area requirements for each household composition, including a total area of 14 m2 or more for single-person households and a couple of 26 m2 or more. Households who do not have the necessary facilities under this Act or live in a space smaller than the minimum residential area is considered to be suffering from housing poverty.
The rising housing poverty rate is the result of a variety of socioeconomic causes. However, above all, the biggest reason is housing price, which is higher than income levels. According to a 2018 housing survey report, the average monthly rent for young households in the Seoul metropolitan area is KRW 41.1 million and monthly rent is KRW 32.9 million, which is higher than the average monthly rent for ordinary households. Of course, buying a house is more difficult. The age that people buy a house only with earned income is gone. According to the KB Financial Group INC, the middle-income bracket should collect annual income for 15.6 years to buy a middle-priced house in Seoul. The time it takes to be able to afford a house due to rising housing prices has increased by two years compared to January 2019 (12.9 years).
Compared to ordinary households, the PIR (price to income ratio) is 5.1 times lower, while the RIR (Rent Index Ratio) averages 20.1%, higher than 15.5% of ordinary households, and the burden of housing costs for young households is higher than that of ordinary households. In particular, the RIR of young households in the Seoul metropolitan area is 20.8%, exceeding the OECD's recommendation of 20%. In this situation, it is no exaggeration to say that it is like a dream for young people who have just entered society or are still students to buy a house.
About Housing Supply Policy
In Korea, the policy to solve youth housing poverty is focused on housing supply. Typical examples include happy housing (행복주택), purchased rental housing for youth (청년매입임대), and Deposit Rental Housing for youth (청년전세임대), which are implemented by the LH (Korea Land and Housing Corporation). Happy housing is a public rental house that provides public transportation convenient and close-to-work land with support from the National Finance and Housing City Fund to relieve housing insecurity for young people. The purchased rental housing for youth is a policy to supply houses purchased from LH with national finances and housing city funds cheaper than the surrounding market price after renovation, repairing or remodeling (reconstruction) to stabilize housing for young people. Finally, the lump-sum housing lease has the advantage of signing a global contract to lease existing houses cheaply to ease the burden of housing costs for young people.
Politicians are also announcing pledges to solve youth housing poverty by focusing on housing supply. In January 2020, the Democratic Party of Korea(더불어민주당) proposed a plan to supply 100,000 houses through a "city customized for youth and newlyweds" as a general election pledge. This pledge is aimed at significantly increasing the supply of housing exclusively for young people and newlyweds and reducing the burden of housing costs for young and newly married couples through financial support. In February, current Seoul Mayor Oh Se-hoon announced that he would supply 360,000 new homes in Seoul over the next five years, both for private and public sales, as a pledge for the general elections. In addition, many Seoul mayoral candidates’ pledges included the plan to solve housing poverty by increasing housing supply.
The ambivalence of housing policy.
These housing supply policies are positive in that it makes it easier for young people to find a house in the current imminent situation where young people who do not have enough fund to puy high prices of house. However, this housing supply policy has the problem of undermining the ability of young people to buy their homes on their own. Yoo Hyun-joon, a professor of architectural design of Hongik University said, "While young people live in rental houses with cheap rent, housing prices will rise further, and when they get married or have to actually buy their own homes for other reasons, the current housing supply policy is a real estate policy that makes young people poor peasantry.
Why having my own house is important?
"To settle down in one place and live in my own house is longstanding instinct of human. Even a small house, it can make people feel stable, and it is important to form a sense of community that there is a place that can be called my house and my neighborhood."
-Chung Mi-ryum, a professor of Special design& Consumer studies of CUK said.
Rental housing is also a type of housing that people can choose appropriately to suit their economic situation. However, it is different with voluntarily “do not” own a house because they do not feel the need, and “cannot” own a house for economic reasons. According to a survey conducted by the Ministry of Land, Infrastructure and Transport, housing ownership awareness (The thought that people need their own house) among residents in the province of Korea increased from 86.6% in 2010 to 87.3% in 2014, and housing ownership awareness among all region of Korea increased from 83.7% in 2010 to 82.5% in 2018. On the other hand, housing ownership awareness among residents in the Seoul metropolitan area has declined. For residents of the Seoul metropolitan area, the fact that housing prices are higher than what they can pay with income, is an important factor that has reduced the housing ownership awareness. Policies for buying one’s own home are necessary for these people who want to their own home, not rent.
Solution: Make young people can buy their own house
Professor Yoo Hyun-joon argues about the solution of problem, the government should improve nationalization policy of purchasing land and change the law to make the land could be marketable. According to Professor Yoo, to solve the problem, the reconstruction of existing buildings should be activated, such as increasing the floor space rate of old but relatively cheap buildings or easing regulations on the construction of underground parking lots, which currently require strict regulations for construction. Reconstruction of existing building make people can buy their homes at relatively low prices than now. This not only helps young people prepare their own homes, but also allows them to experience increasing their assets as housing prices rise, and furthermore, they can try to make profits through buildings by becoming familiar with real estate investments at an earlier age.
You need your own room and £500 a year to do what you want to do.
In 1929, British novelist Virginia Wolfe wrote to this effect in "My Own Room". This phrase means that for self-reliance, minimum living costs and independent living space is need. Home is a place where we live every day, so we may forget importance of that. However, unstable housing conditions can cause mental anxiety and stress, and furthermore, it can act as a factor that hinders individual growth. The stable foundation of young people is the most important indicator of a sustainability of society. Solving youth housing crisis is a crucial project that also affects national development in the future. The state and society should step up to establish a policy environment in which young people can choose various ways to escape from housing poverty in the long term.