Bankers: “Don’t Cancel Your Apartment Application Deposit Accounts”

Yun (43. self-employed), who already owns a home, visited the bank and closed his account after the announcement of the “August 31 Comprehensive Real Estate Plan”.

“Since taxes for homeowners with two homes will increase, I don’t want to bother with apartment-application deposits,” he said.

An employee of Woori Bank said, “Many of our clients are canceling their apartment application deposit accounts, probably due to the current fluctuating real estate market.”

However, bank real estate experts say that it is better to own the accounts, and to open one if one doesn’t already own one.

It is estimated that real estate prices will remain low over the next two to three years, so it will be a golden opportunity to buy a home. There is also the high possibility that the supply of real estate will increase due to the construction of new towns and satellite cities. It is to the advantage of homeowners who want to move into a larger home to open an apartment application account.

Kim In-eung, head of the Woori Bank Private Banking Team, said, “Apartment application deposits will help people with small homes to own larger ones. Regardless of whether someone owns a home, everyone should take advantage of this product.”

Lee (32), who works at a large corporation, says he regretted closing his deposit account almost immediately. “Public development projects are starting in many places, so there are better reasons to own an apartment application deposit. I regret closing mine.”

For people without a home, apartment application savings accounts are the best product. If one makes payments every month for a certain period of time, they are given the priority right to apply for public housing or mid-sized public housing built by private companies. This product is tax-deductible. It is available at Kookmin Bank, Woori Bank, and Nonghyup.

Park Hap-su, head of the Kookmin Bank Real Estate Private Banking Team, said, “The regulations for subscribing to these products will be changed in 2007 to those geared toward real demand. Therefore, application savings accounts for non-homeowners should be fully utilized.

Park explained it would be good to aim for Pangyo in Seongnam, Dongtan in Hwaseong, Paju, Suwon, and other satellite cities in the metropolitan area, and Mapo, Ahyun, Yeongdeungpo and other new towns in Seoul.

After 2007, there will be a lot of houses up for sale, so one should open an account now. It takes two years to receive priority rights. One could also consider utilizing the “first house loan” with the application accounts. The government decided to bring back the first house-funding loan with the implementation of the August 31 real estate plan. Currently, interest rates are low and tax deductible.

Sun-Woo Kim sublime@donga.com