Housing Expenses Including Monthly Rent Turn to Increase in Q3

Photo by Mun Ho-nam munonam@

[Asia Economy Reporter Kim Yuri] In the third quarter of this year, household spending on housing costs such as monthly rent increased by 1.6% compared to the same period last year. This confirms statistically the reality of increased monthly rent burdens on tenants due to the 'Lease 2 Laws,' including the right to request contract renewal and the rent ceiling system for jeonse and monthly rent.

According to the Statistics Korea Household Trend Survey results on the 23rd, the actual housing cost expenditure of households with two or more members nationwide in the third quarter was an average of 84,200 KRW per month, up 1.6% from a year earlier. This average includes households living in owner-occupied or jeonse housing who do not pay monthly rent, so the expenditure for households actually paying monthly rent is much higher.

Housing cost expenditure was 73,700 KRW in the first quarter, down 8% from the same period last year, and 78,900 KRW in the second quarter, down 1.8%. However, in the third quarter, it rose to around 84,000 KRW, marking the first year-on-year increase this year. Actual housing cost expenditure excludes jeonse and consists of monthly rent and 'other imputed housing costs.' Considering that other imputed housing costs are expenses paid when residents of free housing, permanent rental housing, or company housing rent facilities, which account for a small proportion overall, monthly rent constitutes the majority of actual housing cost expenditure.

The increase in housing cost expenditure appears to be because many landlords, feeling the burden of increased property taxes, are converting jeonse contracts into monthly rent or semi-monthly rent. Additionally, the continuous rise in jeonse prices is also understood to have influenced this trend.

By income group, the actual housing cost expenditure for the lowest 20% income group (1st quintile) was an average of 95,500 KRW per month, and the 2nd quintile spent an average of 96,400 KRW. Since higher-income groups tend to live in owner-occupied housing more, the average monthly actual housing cost expenditure for the top 60% income group was less than that of the bottom 40%. The monthly average actual housing cost expenditure for the 3rd quintile was 75,600 KRW, 4th quintile 69,600 KRW, and 5th quintile 84,100 KRW, respectively. A Statistics Korea official said, "Actual housing cost expenditure shifted to an increasing trend in the third quarter compared to the same period last year," adding, "The proportion of monthly rent increased in the lowest 20% income group (1st quintile)."

Monthly rent inflation is also on the rise. The monthly rent consumer price inflation rate compiled by Statistics Korea was negative or flat until May this year. However, since a 0.1% increase in June, the rise has gradually expanded up to 0.3% in October.

Since it is difficult for tenants to reduce monthly rent, the increased monthly rent expenditure may ultimately act as a factor restricting other consumption. In a report titled "Trends in Household Housing Costs Based on the Household Trend Survey" from the second half of last year, Statistics Korea stated, "The burden of housing costs is large and rapidly increasing, especially for low-income households," and "This may restrict other consumption expenditures and consumption capacity."

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