"Up 400 million won in one year"—MOLIT minister nominee Hong Ji-sun faces controversy over heavily leveraged Seoul apartment purchase

[Financial News] Questions have been raised over whether Hong Ji-sun, nominee for minister of the Ministry of Land, Infrastructure and Transport (MOLIT), used loans and money borrowed from family members to purchase an apartment in Seoul last year. The opposition criticized the purchase, saying it may run counter to the real estate policy direction of the Lee Jae Myung administration.
According to an analysis by the office of Kim Eun-hye of the People Power Party, a member of the Land, Infrastructure and Transport Committee of the National Assembly, of Hong's confirmation hearing request and other documents, Hong purchased an apartment in Sindorim-dong, Guro District, Seoul, jointly with his spouse in May last year. The purchase price was 1.005 billion won.
During the purchase, Hong took out a mortgage loan of 367 million won. On April 15 last year, his spouse signed a loan agreement with her mother and borrowed 170 million won. The bank loan and family borrowing totaled 537 million won, more than half of the purchase price.
The day after Hong's spouse borrowed the money from her mother was the scheduled date for paying 200 million won in interim payment under the apartment purchase contract. The loan agreement reportedly stipulated that repayment of the principal would be deferred for one year and that the principal and interest would be repaid at an annual rate of 4.6%. This year, the contract was reportedly amended to extend the deferment period for principal repayment to three years.
Kim's office estimated the apartment's current market value at around 1.41 billion won. Based on that estimate, it calculated that Hong had gained an estimated 400 million won in market value in just over a year since the purchase.
Hong had previously discussed the housing market and lending issues during an administrative audit by the Gyeonggi Provincial Council on November 8, 2021. At the time, while serving as head of Gyeonggi Province's Urban Housing Office, he said, "Since the housing supply ratio in Gyeonggi Province has already exceeded 100%, it is not that there is an absolute shortage of housing itself." He added, "As jeonse deposits and housing prices continue to rise, the situation is driving up even demand that did not previously exist by taking on excessive loans."
Regarding Hong's apartment purchase, Rep. Kim criticized him, saying, "The nominee for minister of MOLIT appointed by President Lee Jae Myung, who told the public not to borrow money to buy a home, was the very person who bought a home by leveraging every available source of funds just one year ago." Kim added, "The president's people are showing through their own actions that the idea that no market can defeat the government is a delusion."
[email protected] Han Seung-gon Reporter