It Takes 16.8 Years to Buy a House in Seoul Without Spending a Single Won of Salary

[Image source=Yonhap News]

[Asia Economy Reporter Kim Hyemin] It has been revealed that a middle-income household in Seoul would take an average of 16.8 years to buy a mid-priced house without spending any of their salary.

According to the housing market trends from KB Kookmin Bank’s Liv Real Estate on the 5th, as of December last year, Seoul’s PIR (Price-to-Income Ratio) based on the 3rd income quintile household and 3rd quintile housing price was recorded at 16.8 years. This is the highest since related statistics began in 2008. It means that securing a home in Seoul is currently the most difficult.

PIR is the ratio of house price to income and is used as an indicator of housing cost burden. House prices and incomes are each classified from the 1st quintile (lowest 20%) to the 5th quintile (highest 20%). As a result, it takes 101.5 years for the lowest 20% income group to buy a high-priced house, and 7.3 years for a middle-income household to buy a house in the lowest 20% price range.

Nationally, it takes 6 years for a 3rd quintile household to buy a 3rd quintile house. The gap between the national average and Seoul is 10.8 years, the largest ever recorded.

The lowest PIR in Seoul was 8.8 years in September 2014. However, since the inauguration of the Moon Jae-in administration, it has increased by 6 years over 3 years and 7 months. While earned income has not increased significantly, housing prices, especially in Seoul, have surged, making it increasingly difficult to secure apartment purchase funds with income alone.

According to the Household Trends Survey by Statistics Korea, the average income of 3rd quintile households in the 4th quarter of last year was 4,628,000 KRW, an increase of only 1.2% compared to the same period the previous year. In contrast, the median price of apartments in Seoul surveyed by KB Liv Real Estate was 947.41 million KRW at the end of last year, up 5.55% (49.9 million KRW) from the same month the previous year. Nationally, it was 435.61 million KRW, a 21.1% (76.04 million KRW) increase.

As housing prices rose, the Apartment Housing Affordability Index (HAI) in Seoul also dropped to 44.1, the lowest since December 2018. The HAI represents the ability to bear the amount needed to repay loans. A value above 100 means it is possible to purchase housing without significant difficulty.

This content was produced with the assistance of AI translation services.