Residents of Seongnae-dong in Gangdong-gu, southeastern Seoul, protest the city's plan to build a public rental apartment for young people in their neighborhood, at a rally held at the district office last Monday. / Korea Times photo by Seo Jae-hoon



By Yoon Ja-young



The government's plan to build more rental homes for young people is facing community resistance, mostly by elderly homeowners who fear possible fallout on their income and property value. Experts point out the low birthrate will eventually hit the housing market if the housing problems of young people are left unresolved.



Dozens of homeowners from Seongnae-dong in Gangdong-gu, southeastern Seoul, held a rally at the district office last Monday, opposing the city's plan to build a public rental apartment for young people in their neighborhood. Most of them were elderly homeowners who lease their homes.



Some residents of an apartment complex in Yeongdeungpo-gu, southwestern Seoul, also made headlines recently by starting a campaign to block a similar city plan in their area.



"The city is planning to build a 19-story apartment for poor people, in the name of rental housing for the young. When it is built, our apartments will get huge damage," they noted in a poster displayed in an apartment elevator persuading other residents to join their move. Those leading the campaign said it will pull down their apartment prices on top of causing traffic congestion. They also feared their neighborhood will become a slum.



The city planned to provide 15,000 rental homes to young people near subway stations last year, but only 8,000 were offered due to community opposition. It reflects the increasing housing conflict between the younger and older generations.



Young people excluded in real estate



The country's housing prices have soared steeply in recent years, but young people who have not saved enough money due to tough job market conditions were totally excluded in the investment payoff. According to Park Choon-sung, a research fellow at the Korea Institute of Finance, only the older generations increased housing purchases during the market boom. He pointed out the ratio of those in their 30s took only 19 percent of mortgages given in 2016, which compares with 33 percent in 2008. The ratio of those in their 50s or older, meanwhile, rose to 46 percent from 37 percent during the same period.



"The income of the older age group has increased continuously, more than other age groups. They have increasingly purchased housing as assets."



As the country still lacks a social safety net, purchasing real estate and getting stable rent is one of the best options for Koreans who are nearing retirement. They thus don't welcome public rental housing.



"As the supply of rental housing increases, rent will inevitably fall. It is natural for landlords to oppose such a plan," said Lee Mi-yun, a researcher at Real Estate 114, a real estate market information provider.



"Due to a surging supply in the market, rent has already started falling. Moreover, the government is restricting homeowners who officially registered as home rental business from raising rent by more than 5 percent annually. The supply of rental housing by the government will make matters worse for them."



A real estate agent in Seongnae-dong said senior citizens who resort to income from rent will lose tenants as the rent is cheaper in public rental housing.



"Housing is all they have and some of them even have to pay mortgages. It is a matter of life or death for them," he said.



"If the government wants to support young people, it can provide them housing vouchers or use existing homes. No homeowners will be happy if the government supplies a massive amount of rental homes without community consent."



Housing problem causing low birthrate



However, this doesn't mean the housing problem can be ignored. According to the latest population and housing census, 84 percent of young people below 30 and living separately from their parents reside in rented housing. The housing conditions are especially poor for young people in Seoul, with four out of 10 either living in substandard housing, such as rooms without kitchens or bathrooms, or spending more than 30 percent of their income on rent.



It is especially serious since housing is related to the low birthrate. Young people are delaying or eschewing marriage and childbirth as they cannot afford housing. According to statistics from the Korea Labor and Society Institute, 82.5 percent of male salaried workers in their 20s or 30s and in the top 10 percent income bracket are married. The ratio of those who are married falls to 6.9 percent in the bottom 10 percent of the income bracket. If one cannot finance housing, marriage becomes an impossible mission.



Experts point out if the housing problems of young people are unresolved, it will worsen the low birthrate and eventually hit the housing market as well. They say Korea is likely to follow in the footsteps of Japan which is suffering from an increasing number of empty homes due to the low birthrate and aging of the population. According to 2015 data, 7.8 million homes in Japan, or 12.8 percent of the total, were empty, which is much higher than Korea's 6.5 percent. "As the falling population decreased housing demand, it has become difficult to sell the excess homes gained through inheritance. The problem of empty homes will be especially serious in provinces where the ratio of senior citizens is high," said Cho Dong-ae, a researcher at the Bank of Korea.



Park echoed that view. "The demographic graph shows demand in the next generation will not be big enough to substitute for the older generation," he said. The country's total population is expected to drop to 42 million in 2060 after peaking at 52 million in 2030.



While homeowners fear the negative impact of rental homes, Lee said the inflow of the younger population can help pull up value of commercial buildings. "By supplying an increasing number of potential customers, the public rental homes for young people can boost local businesses. Though they are not likely to have much purchasing power, the inflow of young people may add vitality."

