Young people in Korea are increasingly losing interest in housing subscription savings accounts, due to a stagnant real estate market and low interest rates. This account enables an adult to be eligible for a state-subsidized or private apartment after making regular deposits for a given period. Falling home prices, a low annual deposit interest rate, and a high probability of not winning the raffle are some of the main reasons why young people are opting to close their accounts or not open one in the first place. This is particularly concerning as the housing subscription savings accounts were originally created to help people save money to purchase a home.
The number of people holding the account has decreased by 860,000 since June 2022, with a total deposit of 100.2 trillion won ($77.38 billion), down by 4.9% since July 2022. This is a significant decrease from the 2.5 million people who held housing subscription savings accounts in June 2019. As a result, the government has been encouraging people to open or maintain their accounts by offering incentives such as tax breaks and higher deposit interest rates.
Despite these efforts, the number of people taking advantage of the housing subscription savings accounts continues to decline. This is concerning for the government, as it reflects a lack of confidence in the housing market and could have long-term implications for the Korean economy. It is clear that the government needs to take more measures to incentivize young people to open and maintain these accounts in order to ensure a stable housing market in the future.
Young people are often advised to diversify their investments, and in light of this, many are being enticed to transfer their money to other types of savings accounts that guarantee higher interest rates than the traditional housing subscription savings accounts. Although there may be some short-term gains to be made, financial experts suggest that it is wise to hold on to the housing subscription savings account as it is often seen as a safer bet due to its stability over the long-term. This is because the market atmosphere can be volatile and unpredictable, and having a reliable and steady investment can help to protect your money from potential losses. Furthermore, the housing subscription savings account offers a range of additional benefits such as tax deductions and added security. Therefore, overall, it is recommended to maintain a balance between higher-risk investments and the more secure housing subscription savings accounts.