‘No hope on my salary’: Young South Koreans turn to early investing

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South Korea has one of the world’s highest rates of elderly poverty among advanced economies.

PHOTO: UNSPLASH

SEOUL - Twenty-eight-year-old Kim goes on a five-hour trip to Ulsan, or any other region, as soon as she gets off work on a weekday. Not for sightseeing or to visit friends, but for property viewing.

“I get off work at 6pm then head to Seoul Station to go for imjang – a Korean term for site visit or field research on real estate properties – in different regions,” she told The Korea Herald.

But she is not looking for a home to live in – she is looking to invest.

Over the past two years, Ms Kim has spent 10 million won (S$9,370) on investment courses. What she learnt was simple, if sobering: With her current income, saving will never buy her a home. Investing is her only option.

Among her preferred strategies is a method known as “gap investment”, which leverages Korea’s unique jeonse lease system.

Under a jeonse lease, tenants pay a lump-sum deposit, often 60 to 80 per cent of the home’s value, instead of monthly rent. Landlords hold the deposit during the lease, usually to earn interest from a bank, and return it in full at the end of the contract.

For investors, this opens a door: Buy a property by paying only the difference, or “gap”, between the property’s market price and the jeonse deposit.

For example, if an apartment is worth 1.7 billion won and a jeonse deposit of 1 billion won already in place, the