'Mom, don't worry — my bonus is W600m': Young Samsung workers drive up Suwon apartment prices

That was the scene at a real estate agency in Yeongtong-gu, Suwon, Gyeonggi Province, on Wednesday, where brokers described a surge in home purchases by Samsung Electronics employees in their 20s and 30s. Employees at major semiconductor firms, flush with large bonuses from the chip boom and low-interest in-house loans, have been pushing up housing prices in the Yeongtong area.

Everyone at the scene agreed that purchase inquiries have been coming in consistently. Newlyweds and young people without homes have been leading transactions. The head of Agency B near the Hillstate Yeongtong complex in Mangpo-dong said inquiries these days are "almost entirely from Samsung Electronics employees." He added that buyers born in 1998 and 2000 have been coming to view units, noting that one customer born in 2000 had purchased a 62-square-meter unit.

According to the Ministry of Land, Infrastructure and Transport's real estate transaction disclosure system, a 62-square-meter unit at Hillstate Yeongtong in Mangpo-dong sold for 1.3 billion won ($971,000) on Sept. 28, setting a new record. Prices have climbed steeply since the unit first broke the 1 billion won mark in March. A local agency said an unregistered transaction for the same unit type had already come in at 1.32 billion won last month.

Local brokers said asking prices remain at levels similar to July and August, but the market is gradually moving up as lower-priced listings are absorbed one by one. The asking price for the 84-square-meter unit — the most popular floor plan — currently stands at 1.6 billion to 1.65 billion won. The head of Agency B said, "Before, when customers came in, it was a mix of serious buyers and window shoppers. Now it's only people who are really going to buy," adding that decisions to sign contracts come quickly after viewings.

Purchase inquiries have also been unrelenting at older large-scale complexes near Cheongmyeong Station on the Suinbundang Line. A broker at Agency A near Yeongtong Fore Park 1 in Yeongtong-dong said that between the first and second phases of the complex, only a dozen or so units are vacant, yet <style ref="s1">on Saturdays they show 10 to 15 groups a day.</style> Inquiries have roughly doubled compared with early this year, the broker said. The 49-square-meter unit at the complex set a record high of 590 million won on Sept. 7 and has since traded above 600 million won. Asking prices are currently 600 million to 620 million won for the 49-square-meter unit and 700 million to 750 million won for the 59-square-meter unit.

Yeongtong-gu is popular among young working professionals not only because of shuttle bus routes serving Samsung Electronics and SK hynix but also for its school districts and lifestyle amenities. Cases have emerged of renters in Yeongtong converting to ownership, as well as newlyweds who had been renting in Seoul or Yongin moving in to buy their first home. Even with investment-driven purchases restricted under the land transaction permit zone designation, prices continue to rise on the back of end-user demand.

According to the Korea Real Estate Board's weekly apartment price trend data as of Sept. 28, apartment prices in Yeongtong-gu, Suwon rose 2.56 percent over the four weeks of September — the steepest increase in the country. The cumulative gain for this year reached 14.68 percent, far outpacing Seoul (8.19 percent) and Gyeonggi Province as a whole (5.32 percent).

The trend reflects bonus expectations colliding with tightening loan regulations to stoke buying sentiment. A broker at Agency C near Cheongmyeong Station said young buyers such as newlyweds "often cover 70 to 80 percent of the purchase price with loans and make up the rest with help from their parents," adding that a significant number of customers are buying in advance even before getting married.

A low-interest in-house loan program has also been helping employees without homes build up funds. Last month, Samsung Electronics began accepting applications from employees without homes for in-house loans of up to 500 million won at an annual interest rate of 1.5 percent. The head of Agency B said many customers are borrowing the full amount, noting that <style ref="s2">the monthly repayment burden is heavy because principal must also be repaid over 10 years, but they figure they can pay it off with their bonuses.</style>

Samsung Electronics' semiconductor (DS) division announced Wednesday its plan to pay a special management performance bonus. According to union estimates, an employee in the memory chip division earning an annual salary in the low 80 million won range is expected to receive a pre-tax bonus of around 750 million won ($560,000). The bonus is set to be paid in company shares after tax deductions in late March to early April next year, with one-third of the shares immediately available for sale.

Experts forecast the upward trend will continue, backed by the strong purchasing power of major conglomerate employees. Ham Young-jin, head of Woori Bank's real estate research lab, said the semiconductor boom — strong enough to push Samsung Electronics' third-quarter operating profit past 100 trillion won — has dramatically increased liquidity in housing markets near major workplaces. He noted that the rally has spread beyond shuttle-route areas such as Bundang, Dongtan and Yeongtong to surrounding areas including Hanam.

Ham added that a sharp short-term price surge could generate market fatigue and lead to a temporary slowdown in transactions, but said that given the solid financial firepower of the buyer base, asking prices and overall price gains look set to continue for now.