What's the Bank of Korea's solution to household debt surge?... 'Korean-style New REITs'

[Anchor]
The Bank of Korea, which proposed expanding the "regional balanced selection system" as a solution to the rise in housing prices in Gangnam, Seoul, has come up with a solution to the surge in household debt this time.It is a system called

'Korean New REITs', and it is said that housing and investment can be solved at the same time without having to take out loans too much.

Reporter Ryu Hwan-hong reports.

[Reporter]
The Bank of Korea proposed "Korean-style New REITs" as a solution to household debt focused on real estate loans at a joint policy symposium with the Korean Financial Society.

This is a system that allows homeless people to invest in REITs, or real estate investment companies, with existing Jeonse and monthly rent deposits, and to earn dividend and equity investment returns from REITs while paying rent in apartments built or purchased by REITs.

For example, an individual can invest 100 million won in a 1 billion won apartment to live for 10 years, and after 10 years, they can earn at least 40 million won to up to 200 million won in investment returns.

[Kim Kyung-min / Professor of Urban Planning at Seoul National University (Joint Research)] If you leave, you will earn profits from the sale of the increase in land value as much as your stake. Therefore, it can be seen as a product that combines residence and investment.]

A response came out that the system can attract the attention of homeless people in that housing and investment can be solved at the same time without unreasonable loans.

[Lee Young-min / Head of Technical Research at SH Urban Research Institute: (Homeless people) desperately want to support self-purchasing funds as the most necessary housing support. In the end, this is not because I want to have a real home, but rather because it reflects the need to keep up with market changes, which is to secure assets.

Bank of Korea Governor Lee Chang-yong said resolving household debt is difficult only by regulating loans or adjusting interest rates, and that if much of the funds needed for housing can be replaced by private capital rather than loans, it would be a great help in resolving household debt.

[Lee Chang-yong / Governor of the Bank of Korea: Housing finance through REITs will be an institutional change that fundamentally changes the asset and debt structure of households, and it will not be an easy task because it is important to change the perception of all stakeholders, including households, financial companies, investors, and policy authorities, to implement it in reality]

In order for the 'Korean-style New REITs' to become a reality, it is necessary to first select suitable candidates for Seoul and its vicinity in consideration of business performance and demand.

It was also pointed out that demand can only be increased when rents are set lower than the market price, and investments from the Housing and Urban Fund are needed so that REITs companies do not rely on excessive corporate loans.

I'm YTN's Ryu Hwan Hong.