ajunews Thursday,29 February 2024

Ordinary worker has to save every wage without spending for 15 years to buy house in Seoul

By Park Sae-jin Posted : December 22, 2023, 14:30 Updated : December 22, 2023, 14:30
Photogrpahed by Yoo Dae-gil  dbeorlf123ajunewscom
[Photogrpahed by Yoo Dae-gil = dbeorlf123@ajunews.com]
SEOUL -- An ordinary worker would have to save every dime of his or her monthly savings for 15 years to buy a house in Seoul, the land ministry's survey data showed. The homeownership rate was 61.3 percent. Renting households in the metropolitan area spent 18.3 percent of their monthly income on rent.

According to South Korea's Real Estate Board (REB), the average price for an apartment in Seoul in 2022 was about 1.3 billion won ($1 million). Apartment complexes are one of the most commonly found forms of homes in Seoul where more than nine million people live. REB's data showed that apartment prices fell by 2.9 percent in 2022, compared to a year ago. The drop in apartment prices is attributed to high interest rates and the economic recession.

The average monthly wage of South Koreans in 2022 was 4,283,000 won, according to the Korea Labor Institute. By age, the average wage of workers in their 40s was the highest, at 5.4 million won, followed by workers in their 50s at 5.1 million won, workers in their 30s at 4.6 million won, and workers in their 20s at 3.4 million won.

A survey of 51,000 South Korean households, conducted by the Ministry of Land, Infrastructure and Transport, showed that the price-income ratio (PIR), the ratio of housing prices to annual income for owner-occupied households in the metropolitan area, in 2022 was 9.3 times based on the median value of the data. PIR indicates the time it takes to accumulate savings without appending a penny of monthly wages to purchase a home.

The figure for the past year was slightly lower than the record high in 2021 (10.1 times). A decrease in PIR from 10.1 times to 9.3 times means that the time required to save 100 percent of wages and spend nothing to buy a home has decreased from around 10 years to about 9 years. However, the PIR in Seoul increased from 14.1 times in 2021 to 15.2 times in 2022, and the PIR in the western port city of Incheon increased from 7.1 times to 7.7 times, respectively. The nationwide average Price Income Ratio (PIR) decreased from 6.7 times in 2021 to 6.3 times in 2022.

Meanwhile, the rent income ratio (RIR), the ratio of monthly housing rent to monthly income, slightly increased. The nationwide RIR increased to 16.0 percent (based on the median) from 2022's 15.7 percent. The RIR also increased from 17.8 percent to 18.3 percent in the metropolitan area. The increase in metropolitan area's RIR was witnessed for the first time in three years since 2019 (20.0 percent). Seoul's RIR increased from 21.3 percent in 2020 to 21.6 percent in 2021 but decreased to 20.9 percent last year.

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