Surge in 30s Going 'Yeongkkeul' for Home Purchase... Average Debt Reaches 100 Million Won

Statistics Korea to Release '2020 Household Finance and Welfare Survey' on the 17th

[Image source=Yonhap News]

[Asia Economy Reporter Jang Sehee] It has been revealed that households in South Korea carry an average debt of 82.56 million KRW. In particular, the debt increase among people in their 30s was remarkable.

According to the '2020 Household Finance and Welfare Survey' jointly announced on the 17th by Statistics Korea, the Financial Supervisory Service, and the Bank of Korea, as of the end of March this year, the average household debt was 82.56 million KRW, an increase of 3.46 million KRW (4.4%) from one year earlier (79.10 million KRW). Financial debts such as mortgage loans and credit loans increased by 5.1% to 60.5 million KRW, and rental deposits rose by 2.4% to 22.07 million KRW. As financial debt increased more significantly, the proportion of financial debt in total debt expanded by 0.5 percentage points to 73.3%.

By age group, the debt of young households increased sharply. The average debt per household for household heads aged 39 and under was 91.17 million KRW, up 12.2% from 81.25 million KRW a year earlier. Among them, the debt of households in their 30s rose to an average of 100.82 million KRW, surpassing 100 million KRW for the first time ever. This is interpreted as a result of a rapid increase in young people taking out loans to buy their own homes or to prepare rental deposits amid the continued rise in housing prices and jeonse (long-term deposit lease) prices. Credit loans for households in their 30s averaged 13.78 million KRW, the highest among all age groups.

Looking at income levels, the debt of low-income households showed a higher growth rate than that of high-income households.

Household debt for the 1st income quintile (lowest 20%) and 2nd quintile (lowest 40%) was 17.52 million KRW and 40.56 million KRW respectively, increasing by 8.8% and 8.6% compared to a year earlier. It appears that low-income households, hit by the impact of the COVID-19 pandemic, increased their debt to cover living expenses. The debt per household head in the 5th income quintile (highest 20%) was 186.45 million KRW, up 5.3% from last year. Debt in the 4th quintile (top 40%) increased by only 1.4% to 99.75 million KRW. With increases in various public transfer incomes such as basic pension, childcare allowance, and disability allowance, income disparity decreased last year.

The 5th quintile ratio of equivalized disposable income, which shows the income gap between the top 20% and bottom 20%, fell by 0.29 points from the previous year to 6.25 times last year. The Gini coefficient, an indicator of income inequality, was 0.339, down 0.006 points from the previous year. Lim Kyung-eun, head of the Welfare Statistics Division at Statistics Korea, stated, "The Gini coefficient based on disposable income in 2019 was 0.339, an improvement of 0.006 compared to 0.345 the previous year." The Gini coefficient is an indicator of income inequality; the closer to 0, the more equal, and the closer to 1, the more unequal.

Meanwhile, household income by income quintile generally increased. In particular, the average income of households in the 1st quintile was 11.55 million KRW, up 4.6% from the previous year. The significant increase in income for 1st quintile households was due to the government compensating for reduced earned income through various support payments.

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