Average Korean would have to save 15 years’ worth of income to afford a home in Seoul

Posted on : 2023-12-28 09:55 KST Modified on : 2024-01-02 09:58 KST
Homeownership has declined among Koreans aged 19-34 and newlyweds on account of high real estate prices
Apartments in Seoul’s Jamsil neighborhood. (Park Jong-sik/The Hankyoreh)
Apartments in Seoul’s Jamsil neighborhood. (Park Jong-sik/The Hankyoreh)

The proportion of young South Koreans who own their own home reached a five-year low of 13.2% amid rising housing prices, with a 7.1-point decline in four years for the percentage of home-owning newlywed couples.

While the homeownership rate among young and newlywed people is inevitably lower than that of other ordinary households, national statistics attest to a situation where homeownership conditions have declined annually amid the sharp rise in housing prices over the past few years.

On Friday, the Ministry and Land, Infrastructure and Transport published findings from a 2022 examination on residential ownership conditions, based on interviews and surveys of 51,000 sample households nationwide.

The results showed a homeownership rate of 13.2% last year for households categorized as “young,” with a head of household aged 19 to 34 years.

When related statistics were first collected in 2017, the rate was calculated at 19.2%. The number has since fallen each year, reaching 16.1% as of 2020. Last year, it was a full 6.0 percentage points lower than five years earlier.

Meanwhile, the proportion of young households renting their homes consistently rose from year to year, climbing from 75.7% in 2017 to 82.5% in 2022 for an increase of 6.8 percentage points in five years.

Among newly married couples — defined as those married for seven years or less — homeownership has declined and rentals have risen significantly over the past four years.

When the survey was first conducted in 2018, the rate of homeownership for newly married couples was 50.7%. That rate has also fallen each year, reaching 46.1% in 2020 and 43.6% in 2022, for a drop of 7.1 percentage points in four years. Meanwhile, the proportion of newly married couples renting their home rose from 45.6% in 2018 all the way to 52.9% in 2022.

The numbers point to a situation where the housing situation for young and newly married South Koreans has worsened from year to year amid fluctuations in the real estate market over the past few years, including sharp rises in housing prices.

According to the survey’s findings, the median price-to-income ratio for homeownership in the greater Seoul area last year was 9.3. That number represents the length of time a prospective homeowner would have to save their entire salary to afford a home.

The number was down slightly from the all-time high of 10.1 reached in 2021. But examination by region showed the ratio rising from 14.1 to 15.2 for Seoul and from 7.1 to 7.7 for Incheon between 2021 and 2022. That means a person would have to save their entire salary for 15.2 years in order to purchase their own residence.

The reason the ratio rose for Seoul despite major declines in housing prices last year is that the statistics are based on an examination of housing prices as of June of each year. The 2022 decline in housing prices did not enter full swing until the second half of the year. Sejong (9.3) and Gyeonggi (8.9) were the areas with the next-highest ratios after Seoul.

The median rent-to-income ratio saw a minor increase last year, at 16.0% for Korea overall compared to 15.7% in 2021. That means that renters are spending 16% of their incomes on rent.

In the greater Seoul area, this ratio grew to 18.3% last year from 17.8% in 2021, the first time it’s seen an increase since 2020 (20%)

Last year, Koreans’ homeownership rate reached a record high of 61.3%, up 0.7 points from 2021. That’s the highest the rate has been since statistics first began being collected in 2006. The homeownership rate was up in the greater Seoul area (from 54.7% to 55.8%) and other metro areas (from 62% to 62.8%).

The time it would take for the head of a household to purchase their first home was estimated to be 7.4 years, a slight dip from the year prior (7.7 years)

By Choi Jong-hoon, staff reporter

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