Korea unveils new housing measures to boost record-low birthrate

[Photo by Lee Chung-woo]

The South Korean government on Tuesday unveiled a range of housing support measures with the aim of addressing the nation’s chronically low birthrate.

Under the measures, the government will introduce a specialized and prioritized housing supply system tailored for families with newborns, spanning both public and private housing sectors.

Commencing in March next year, a dedicated public housing supply for families with newborns will be launched, providing housing options for around 30,000 households annually. To qualify for this housing supply, applicants need to demonstrate that they have either given birth or become pregnant within two years of the resident recruitment notice, regardless of their marital status. Eligibility, however, hinges on earning less than 150 percent of the average monthly income of urban workers (equivalent to 9.76 million won or $7,400 for a family of three) and holding assets valued at less than 379 million won.

For families consisting of four members, the income threshold to participate in the newborn special program is set at less than 12 million won per month. This implies that even households with a substantial annual income of 144 million won can avail themselves of the opportunity to join the public sale special program upon the birth of a child.

Moreover, families that have recently welcomed a child will have access to a special low-interest loan, even if their combined annual income exceeds 100 million won. The newborn special program and low-interest loan assistance are accessible to all individuals with children, even if they are unmarried.

For private housing, 20 percent of the specialized supply quota designated for first-time buyers or newlyweds will be prioritized for families with newborns. However, these families must meet the income criterion of less than 160 percent of the average monthly income of urban workers, or 10.41 million won for families of three or fewer members.

The government plans to adjust relevant regulations to encompass all apartments with resident recruitment notices under the umbrella of the newborn special offer and priority supply, effective from March onwards. While the government’s goal is to provide 70,000 units annually (including rental units) for families with newborns, the actual yearly count will take 2 to 3 years to fully materialize due to licensing considerations.

In the meantime, families with only one child had little advantage in the apartment subscription system as it was difficult to win the newlywed special offer, which favors two-child households, and the first-time buyer special offer, which selects winners by lottery, is more competitive.

[Image source: Gettyimagesbank]

In this regard, the government plans to introduce various subscription systems that favor married households, including establishing a lottery system for first-time buyers and newlyweds, allowing individual application for married couples, exemption of the special regulation for spouse property ownership history, and combining the subscription account membership period for spouses.

In particular, the combined spousal subscription period will increase the subscription value by up to 3 points. It is expected to have a significant impact on the competitive general supply subscription market where the outcome depends on a single point. In the case of the special offer for public housing targeted at first-time buyers and newlyweds, a 200 percent income criteria will be applied, allowing high-income households with a monthly income of about 13 million won (based on a family of three) or less to benefit from the special offer.

In January next year, special loans for families with newborns will also be introduced, with significantly lowered income criteria. Moreover, childcare subsidies will also be significantly expanded from next year. One of the notable changes is the increase in parental allowances for parents with children aged 0-1. A budget of 700 billion won will be allocated, and the parental allowance for parents of children aged 0 will increase from the current 700,000 won to 1 million won, while for children aged 1, it will increase from 350,000 won to 500,000 won.

Support for families with multiple children will also be enhanced. The maternity benefit, which is paid in the form of a voucher of 2 million won per child, will be increased to 3 million won from the second child.

The parental leave period will also be extended. If a couple takes a leave of absence to raise a child together, they will be able to extend the paid parental leave period to one year and six months. Parents can receive 80 percent of their regular wages (up to 1.5 million won per month) during the leave. However, it can only be extended if both parents are on parental leave for more than three months. The government plans to revise relevant laws with the goal of implementing the system in the second half of next year.

The infant special exception, which raises the salary to 100 percent of the regular wage if both parents take parental leave during the infancy period (up to 18 months of age) when the burden of childcare is high, will be expanded from a maximum of three months to six months, and the salary cap, which is 2 million to 3 million won, will be raised to 2 million to 4.5 million won.

The government is also taking measures to reduce the working hours of parents, such as reducing the working hours during the parenting period. The reduction of working hours during childcare is a system that allows parents to reduce their working hours to 15 to 35 hours a week to raise their children. Currently, workers with children under the age of 8 (second graders) can use the program for up to one year, but the government plans to increase the age of children eligible for the reduction from 8 to 12 (sixth graders) and the duration to up to three years.