You Need to Save for 17.6 Years Without Spending a Single Won to Buy a House in Seoul

View of Seoul apartments from 63 Square. Photo by Hyunmin Kim kimhyun81@

[Asia Economy Reporter Kim Hyemin] It has been found that a middle-income household in Seoul would take an average of 17.6 years to buy a mid-priced house without spending any of their salary.

According to the monthly housing market trends from KB Kookmin Bank’s Liv Real Estate as of September last year, Seoul’s PIR (Price-to-Income Ratio) based on the 3rd income quintile household and 3rd quintile housing price was calculated to be 17.6 years.

PIR is the ratio of house price to income and is used as an indicator of housing cost burden. House prices and incomes are each classified from the 1st quintile (lowest 20%) to the 5th quintile (highest 50%). As a result, it takes 100 years for the lowest 20% income group to buy a high-priced house, and 7.5 years for a middle-income household to buy a house in the lowest 20% price range.

On a nationwide basis, it takes 6.9 years for a 3rd quintile household to buy a 3rd quintile house. The gap between the nationwide average and Seoul was 10.7 years.

The lowest PIR in Seoul was in September 2014, at 8.8 years. However, it steadily increased after the current government took office, reaching 18.5 years in June last year. While earned income did not increase significantly, housing prices surged mainly in Seoul, making it virtually impossible to finance apartment purchases solely with income.

According to the Household Trends Survey by Statistics Korea, the average income of 3rd quintile households as of the third quarter last year was 4,018,000 KRW, an 8.6% increase compared to the same period the previous year. Meanwhile, the median apartment price in Seoul surveyed by KB Liv Real Estate was 1.06 billion KRW in September last year, a 15.2% (139.83 million KRW) increase compared to the same month the previous year.

As housing prices rose, the Housing Affordability Index (HAI) for apartments in Seoul dropped to 41. The HAI represents the ability to bear the amount needed to repay a loan. A value above 100 means it is possible to purchase a house without significant difficulty.

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