Hong Ji-sun’s 1 Billion-Won Apartment: Was It Really a Highly Leveraged Buy? The Timing Was Impeccable

Hong Ji-sun, South Korea’s nominee for land and transport minister, reported assets worth 829.87 million won, including a Seoul apartment whose value has risen substantially since the couple bought it last year.

According to the confirmation hearing request submitted to the National Assembly, Hong and the nominee’s spouse jointly own the apartment in Guro-dong, Guro District, valued at 1.005 billion won. Hong reported 216.61 million won in personal assets, including half the apartment’s value, a 2016 Sonata, 154.54 million won in deposits and 447 million won in financial debt.

The spouse reported 282.62 million won, including the jointly owned apartment, a 2009 Audi A6, 15.58 million won in deposits, 480,000 won in stocks, 70.48 million won in financial debt and 170 million won borrowed privately. Their child reported 700,000 won in deposits.

The People Power Party’s Kim Eun-hye lawmaker’s office questioned whether the purchase amounted to a so-called “highly leveraged” investment. It said Hong borrowed 367 million won through a mortgage, while the spouse borrowed 170 million won from the nominee’s mother after signing a loan agreement. The office argued that the couple used about 530 million won in debt to buy an apartment now worth around 1.4 billion won, producing a paper gain of more than 400 million won in roughly a year.

Real estate industry assessments cited in the report pushed back on that characterization. The mortgage represented 36% of the purchase price, and total debt including the family loan was about 53%. That remained below the 60% loan-to-value limit applying in Guro, then a non-regulated area, to households without a home or to one-home owners subject to a disposal condition. The timing, however, was considered particularly favorable because Seoul apartment prices rose sharply after the purchase.