"No Meaning Without a Home"... Why People Earning Over 6 Million Won Monthly Still Feel 'Below Middle Class'

9 out of 10 Earners Making 6 Million Won Monthly Say "I Am Middle Class or Below"
Time to Buy a House in the Capital Area Without Spending a Penny on Salary Increases from 6.8 to 8 Years
Experts Say "House Prices Will Fall This Year"

A citizen is looking at the densely packed apartment complexes in Seoul city from 'Seoul Sky,' the observation deck of Lotte World Tower in Songpa-gu, Seoul. The photo is unrelated to specific expressions in the article. [Image source=Yonhap News]

[Asia Economy Reporter Heo Midam] A survey found that 9 out of 10 high-income earners with a household income exceeding 6 million won last year perceived themselves as 'middle class or below.' This appears to be due to the widening asset gap caused by skyrocketing housing prices in recent years, depending on whether one owns real estate. In particular, some non-homeowners lamented that they became 'byeorakgeoji' (suddenly impoverished) overnight due to the soaring house prices. Ultimately, even if monthly earned income is high, those without a home do not classify themselves as upper class. Experts predict that housing prices will decline this year.

According to the '2021 Social Survey' results announced by Statistics Korea on the 1st, among people with an average monthly household income of 6 million won or more last year, 91.1% responded that they consider their social and economic status to be 'middle' or below. Among them, 78.3% felt they belonged to the middle class, and 34.7% felt they belonged to the lower-middle class. Additionally, 12.8% considered themselves to be in the lower class.

However, among those with a household income of 6 million won or more, the average monthly income bracket was the highest among the survey subjects. In other words, despite having the highest average monthly income bracket, the majority of those with household incomes over 6 million won did not perceive themselves as belonging to the upper class.

The reason even those in the high-income bracket feel a sense of deprivation seems to be the gap between earned income and asset income. In particular, as real estate prices have surged in recent years, the increase in asset income among the asset-rich class has also grown significantly.

According to Statistics Korea's housing ownership statistics, as of November 1, 2020, the average housing asset value (based on publicly announced prices) of housing-owning households was 324 million won, an increase of 49 million won compared to the previous year. In contrast, the average house price of the top 10% of households by housing asset value was 1.309 billion won, up 206 million won.

Office workers are hurrying their steps at the Gwanghwamun intersection in Seoul. Photo by Mun Ho-nam munonam@

In summary, the polarization phenomenon of 'the rich getting richer and the poor getting poorer' due to real estate has intensified, diminishing the significance attributed to earned income even among those with high earned income.

Given this situation, some office workers express feelings of relative deprivation. They point out that no matter how hard they try, the already widened asset gap cannot be reduced due to the deepening polarization.

Choi, a 28-year-old office worker in his third year at a small and medium-sized enterprise, said, "My monthly salary is about 3 million won, but after considering monthly rent, phone bills, and food expenses, there is little money left." He sighed, saying, "'Owning a home' is a dream only for the 'gold spoon' class."

He added, "There is no hope for the future. Even my acquaintances gave up on 'owning a home' a long time ago," and "Even if housing prices fall now, it doesn't seem like they will return to the prices from a few years ago."

Meanwhile, last year, a survey showed that to buy a house in the metropolitan area, one would need to save their entire salary without spending a single penny for 8 years.

According to the '2020 Housing Survey Results' announced by the Ministry of Land, Infrastructure and Transport in August last year, the 'Price-to-Income Ratio (PIR, based on median price)' indicating the cost burden when purchasing a house rose sharply to 8.0 times in the metropolitan area in 2020, compared to 6.8 times in 2019.

PIR represents the time it takes to buy a house by saving one's entire salary without spending any money. The increase from 6.8 to 8.0 means that the time for a median income earner to save up for a home without spending any salary has extended from 6.8 years to 8 years.

Experts analyzed that subjective judgment plays a role in the criteria for classifying social classes. Professor Kim Taegi of Dankook University's Department of Economics said, "When defining the middle class, subjective judgment influences perceptions. Having a high earned income does not automatically mean one is middle class. For example, people consider themselves middle class only if they own a home and a car."

He added, "The reason housing prices have surged so far is due to policies that suppress real estate supply. However, since the government and presidential candidates from both ruling and opposition parties are now easing real estate regulations, I expect housing prices to fall this year."

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