Household Debt Nears 90 Million Won... Rising Debt Growth Rate in 30s Due to 'Housing Prices' Burden

2021 Household Financial Welfare Survey

[Sejong=Asia Economy Reporter Son Sun-hee] The average household debt in South Korea was found to be approaching 90 million KRW. Notably, the debt growth rate among people in their 30s was the only double-digit increase across all age groups, which is analyzed to be due to the rise in jeonse and monthly rent deposit amounts.

According to the results of the '2021 Household Financial Welfare Survey' jointly conducted by Statistics Korea, the Bank of Korea, and the Financial Supervisory Service on the 16th, the average household debt as of the end of March was 88.01 million KRW, showing a 6.6% increase compared to one year earlier. The debt growth rate has steadily expanded over the past three years from 3.2% to 4.4% and then to 6.6%.

The average financial debt was 65.18 million KRW, accounting for about 74.1% of the total, while the average rental deposit was 22.83 million KRW (25.9%). These amounts increased by 7.7% and 3.5%, respectively, compared to the previous year. Since the financial debt growth rate was relatively higher, the proportion of financial debt increased by 0.8 percentage points.

The proportion of households holding debt among all households was 63.6%, a decrease of 0.1 percentage points from one year earlier. By debt amount, the highest proportion was households with debt between 10 million and 30 million KRW at 16.7%, followed by 110 million to 200 million KRW at 16.1%, less than 10 million KRW at 13.8%, and over 300 million KRW at 11.4%.

Looking at income quintiles, the 4th quintile, which belongs to the relatively higher income group, showed the largest increase in debt at 9.7% compared to one year earlier. This was followed by the 2nd quintile at 9.5%, the 5th quintile at 5.5%, and the 3rd quintile at 4.9%. The 1st quintile's debt growth rate was only 0.1%.

The highest income 5th quintile households accounted for 44.7% of total debt, while the lowest income 1st quintile households accounted for 4.0% of the total.

By household head age, the debt growth rate for those in their 30s recorded 11%, the largest increase among all age groups. This was followed by those aged 60 and over at 8%, those in their 40s at 4.8%, those 29 and under at 2.1%, and those in their 50s at 1.6%. The debt growth rate for those 39 and under (29 and under plus 30s) was 9.5%.

Im Kyung-eun, Director of Welfare Statistics at Statistics Korea, explained, "The high debt growth rate among those 39 and under is mainly due to a significant 12.7% increase in financial debt," adding, "The proportion of those 39 and under holding jeonse and monthly rent deposits has increased, and within that group, the increase in jeonse and monthly rent deposits was quite substantial." In other words, the surge in jeonse and monthly rent deposits has led to a sharp rise in debt among the younger generation in their 20s and 30s.

Excluding rental deposits, 57.4% of all households held financial debt. The amount of financial debt held was highest among households in their 40s at 126.61 million KRW and lowest among those aged 60 and over at 97.83 million KRW.

By employment status of the household head, the proportion of households holding financial debt was highest among regular employees at 69.9%, followed by self-employed households at 65.3%, and temporary/daily workers at 48.5%.

In a perception survey conducted among households holding financial debt, 65.5% responded that "repaying principal and interest is burdensome," a decrease of 2.1 percentage points from one year earlier. Households responding that "repayment of household debt is impossible" accounted for 5.4%, a decrease of 1.3 percentage points over the same period.

As of the end of March, the debt-to-asset ratio was 17.5%, down 1.0 percentage point from the previous year. The ratio of financial debt to savings increased by 1.2 percentage points to 80.5%.

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