Hard Life in Seoul... Housing Purchase Burden Index Rises After One Year
Housing Finance Corporation Seoul Housing Purchase Burden Index... Q3 2019 123.6 → Q4 126.6
National Housing Purchase Burden Index Declines
[Asia Economy Reporter Kwon Haeyoung] The Seoul Housing Purchase Burden Index reversed to an increase after one year.
According to the Korea Housing Finance Corporation on the 14th, the Seoul Housing Purchase Burden Index recorded 126.6 in the fourth quarter of 2019, rising 3 points from the previous quarter (123.6). This is the first time in one year since the fourth quarter of 2018 that the Seoul Housing Purchase Burden Index has risen compared to the previous quarter.
The Housing Purchase Burden Index indicates the loan repayment burden when a median income household purchases a median-priced house. An index of 100 means that about 25% of income is spent on principal and interest repayment of a mortgage loan, so the higher the index, the greater the housing purchase burden.
The nationwide Housing Purchase Burden Index fell by 0.6 points from 51.1 in the third quarter of last year to 50.5 in the fourth quarter. By region, most areas including Busan, Daegu, Incheon, Gwangju, Gyeonggi, and Jeju saw declines, while only Daejeon rose 1.6 points from 49.2 to 50.8 during the same period.
Seoul housing prices remained stable in the first half of last year after the September 13, 2018 real estate measures, but surged sharply in the second half. The upward trend has currently been curbed by the government's December 16 measures announced last year.
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The financial sector is closely monitoring the potential impact of future base rate cuts on the real estate market. There are conflicting views that the housing market could rapidly freeze due to the sharp economic downturn caused by the spread of the novel coronavirus infection (COVID-19), and that liquidity from interest rate cuts could flow into the housing market.
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