Kicking away the ladder: Housing curbs, stock slump derail young Koreans' wealth plans

[NEWS ANALYSIS]

Hwang, a 34-year-old office worker, spent years following the path many young Korean couples used to take to build wealth: buy a starter home, invest in stocks and gradually build enough wealth to move up the property ladder.

Recently, however, Hwang, the mother of a newborn baby, watched both pillars of that plan crumble.

After buying an apartment in Gyeonggi a few years ago, Hwang and her husband planned to trade up to a home in Seoul once they had a baby, moving closer to her office in Gangnam, southern Seoul. The move would have cut her daily round-trip commute of nearly three hours while placing their child in a better school district.

But the government’s mortgage lending curbs last year left the couple unable to finance the purchase, derailing their long-held plans. At the same time, a sharp decline in the Kospi eroded the investment gains she had hoped would help fund the move, leaving the family's carefully laid plans in limbo.

“I’d like to believe our life plan has just been postponed, but I’m not sure it’ll ever happen given how things are going,” Hwang said. “It feels like I’ve missed my chance. I keep asking myself whether things would’ve been different if I’d traded up before the government changed in 2025.”

She added, “In this regulatory and market environment, it's hard to see how young people can realistically build wealth without financial support from their parents."

Hwang is one of many young Koreans who lament their financial future. They believe the government’s tighter real estate policies have pulled away the property ladder — long regarded as the most reliable path and the first step to financial security in Korea.

That frustration stems from the outsized role real estate plays in Korean wealth accumulation: property assets in Korea were equivalent to 6.7 times gross domestic product in 2024, far exceeding the ratios of 2.9 times in the United States and 3.7 times in Japan, according to the Bank of Korea data.

The government has scrambled to address mounting concerns over housing affordability with measures aimed at both boosting supply and easing lending constraints. On Thursday, it announced its fourth housing supply plan, pledging to provide more than 230,000 additional homes in the greater Seoul area by accelerating development on public land and lifting some greenbelt areas to stabilize housing prices. On the lending side, the financial sector will have an additional 30 trillion won ($21 billion) in household lending capacity this year, with the government seeking to ease funding constraints for relocation loans tied to redevelopment and reconstruction projects.

But many remain skeptical, as construction is not expected to begin at least until 2029 and mortgage loan caps remain unchanged. 

President Lee Jae Myung on Thursday said the country’s “real estate bubble has reached a point where it can no longer be allowed to grow unchecked,” warning that the prolonged concentration of social resources in property has deepened polarization and inequality. His remarks suggest that the government is unlikely to ease its existing lending restrictions or roll back high property-related tax measures for some homeowners.

Alternative investment channels have offered little relief, with the Kospi plunging 25 percent from its June peak and wiping out gains for many who followed the administration’s call to invest at home rather than overseas. For them, the losses have left them nowhere to turn.

Locked out of assets

Building wealth has never been easy for young people, as each generation has faced its own economic hurdles. But for Korean youth, the challenge has been particularly acute.

The Federal Reserve’s latest Survey of Consumer Finances showed that American households headed by people under 35 had a median net worth of $39,000 in 2022, up 143 percent from 2019. By comparison, the net assets of Koreans aged 39 and under rose just 21 percent over the same period, to 261.4 million won. Last year, they even fell 0.9 percent on year to 221.58 million won.

Young Koreans say building wealth has become even more difficult lately, as tighter lending regulations have narrowed their ability to use loans as leverage to build assets, even when they can afford the interest payments.

Since taking office in June 2025, the Lee Jae Myung administration has pursued a clear goal: reducing Korea’s excessive concentration of wealth in real estate while promoting the stock market as an alternative avenue for wealth creation.

The government capped mortgage lending for homes in the greater Seoul area and other regulated districts at 200 million won to 600 million won, far below Seoul’s average apartment price of 1.59 billion won in July, according to KB Real Estate Data Hub.

As complaints mounted over real estate policies, the government on Thursday announced comprehensive financial measures to stabilize the housing market.

They included cutting the time from public housing site designation to construction from 68 months to 37 months to speed up housing supply, while adding 230,000 homes in the greater Seoul area, including 100,000 homes on new housing sites in areas such as Gangseo District in western Seoul and Namyangju in Gyeonggi. Construction of some 89,000 homes, including in the Seoripul area of southern Seoul, will also be fast-tracked, with work set to begin by 2030.

The measures come as only an estimated 105,000 newly built apartments are set to be completed in the Seoul metropolitan area this year, well below the 10-year average of 183,000.

The will to increase housing supply was reiterated by President Lee, who called for an “all-out effort to boost housing supply” at a senior presidential secretaries’ meeting on the same day. Lee said the government should devote all available means and resources to tackling the real estate problem, which he described as a “ticking time bomb,” as “extraordinary efforts” are needed to make up for a “supply cliff” that has persisted since 2022.

While ambitious on the housing supply expansion, the government said it will “firmly maintain” key lending restrictions, keeping the loan-to-value ratio at 40 percent in regulated areas and the debt-service ratio cap at 40 percent for banks. Mortgage lending will also remain capped based on home prices: 600 million won for homes priced at 1.5 billion won or less, 400 million won for homes priced above 1.5 billion won and up to 2.5 billion won, and 200 million won for homes priced above 2.5 billion won.

Such strict lending rules, coupled with a tight housing supply that will take years to address, have left many young people feeling increasingly shut out of the path to building wealth, data suggests.

As of July, the nationwide average apartment price had climbed 9.4 percent from when the Lee administration took office in June last year — and 15.4 percent in Seoul alone — but many young adults have been unable to benefit from the resulting housing wealth gains.

Just 27.7 percent of people aged 39 or younger owned the homes they lived in last year, down 2.4 percentage points from a year earlier, according to the Ministry of Data and Statistics. It was the first time the figure fell below 30 percent since comparable records began in 2017.

A shift too fast for reality

The government has taken a different tack in the stock market, seeking to encourage investment in Korean equities through market-friendly measures. They included providing tax incentives for local investors who shift funds from foreign equities into Korean stocks, as well as commercial law reforms aimed at strengthening shareholder rights and encouraging higher corporate dividend payouts.

Despite these efforts, many young people are also suffering losses in the stock market, as heightened volatility, partly driven by the introduction of single-stock leveraged exchange-traded funds in May, has eroded investment gains.

After the Kospi surged 76 percent in 2025 and gained nearly another 110 percent to reach a record high in June, many retail investors — including budget-tight young people who borrowed to amplify their bets — chased the rally. When the market reversed, margin calls triggered forced selling that locked in losses. Investors in their 30s accounted for 52.34 billion won, or about 37 percent, of June's 142.05 billion won in forced-sale transactions, according to Herald Business, citing data from Rep. Kim Sang-hoon's office.

While experts agree that redirecting capital toward productive investments such as equities is the right approach for an economy seeking to boost productivity and growth, they argue that the transition has been too abrupt.

“Real estate, by its nature, has a high entry barrier, so it can’t provide opportunities for everyone,” said Kim Yong-jin, a business professor at Sogang University. “A more inclusive path to wealth creation requires companies to grow and stock market to develop so that the gains from economic growth can be shared more broadly. In that sense, shifting capital toward financial markets is the right approach.”

But he added, “The problem is that the transition has been pushed through too quickly, creating a wide gap between the policy’s intentions and the realities people face.”

The sentiment is evident in data, as many investors ultimately channeled their stock gains into real estate despite the regulatory measures against properties.

From January through April, a total of 3.73 trillion won in proceeds from stock and bond sales were used for home purchases, with buyers in their 30s accounting for the largest share at 34 percent, according to data compiled by Rep. Kim Jong-yang’s office from housing purchase funding plans. The plans are documents disclosing the sources of funds used to buy a home and are required for all home purchases in regulated areas and for transactions worth 600 million won or more in non-regulated areas.

For homes priced at 1.5 billion won or more, stock and bond sale proceeds accounted for a record 13.2 percent in April, rising sharply compared to the average 3 to 4 percent annually from 2020 to 2025.

Rather than focusing solely on steering capital from real estate into the stock market, some experts argue that policymakers should broaden access to real estate investment by expanding easily tradable, low-cost investment vehicles that allow young people to build wealth with relatively small amounts of capital.

“Instead of simply suppressing housing demand, the government should introduce indirect real estate investment products, such as Real Estate Investment Trusts [REIT] using houses owned by multiple-home owners,” said Huh In, an economics professor at the Catholic University of Korea.

“That would allow young people to gain exposure to housing real estate with relatively small amounts of capital,” Huh said, adding that the government would first need to ease restrictions on multiple-home owners, as owner-occupied homes cannot easily be incorporated into such investment products.

BY JIN MIN-JI [jin.minji@joongang.co.kr]