[Ordinary People Report] 80% of Average Assets of 500 Million Won Are Real Estate... 251 Times Gap Between Top and Bottom 20%

[Asia Economy Reporter Yoo Je-hoon] As the average household assets in South Korea surpassed 500 million won, the proportion of real estate assets within the average household assets reached 79.9% amid continued real estate price increases. Meanwhile, the gap in real estate assets between high- and low-asset groups widened to 251 times, marking the largest disparity in the past four years.

According to the 'Ordinary People's Financial Report' published by Shinhan Bank on the 5th, the average household assets last year were recorded at 517.92 million won, an increase of 79.83 million won compared to the previous year. This report was compiled based on a survey and analysis conducted via email questionnaires targeting 10,000 economically active individuals aged 20 to 64.

The average assets by household income bracket showed growth across all segments. The 5th bracket (top 20%) increased by 125.86 million won to 1.0351 billion won, the 4th bracket (top 20-40%) rose by 99.91 million won to 647.51 million won, and the 3rd bracket increased by 113.99 million won to 513.38 million won.

For the 1st bracket (bottom 20%) and 2nd bracket (bottom 20-40%), asset growth had been less than 10 million won annually until 2020, but last year saw a larger increase. The 1st bracket rose by 19.13 million won to 122.54 million won, and the 2nd bracket increased by 40.25 million won to 271.07 million won.

By asset type, real estate assets increased by 21.1% (72.14 million won) to 413.86 million won. This accounts for 79.9% of the average household assets. The proportion of real estate assets has shown continuous growth over four years: 75.9% in 2018, 76.0% in 2019, and 78.0% in 2020.

Real estate assets also increased across all household income brackets. The 5th bracket saw an increase of 107.79 million won to 831.30 million won, the 4th bracket rose by 86.54 million won to 523.94 million won, and the 3rd bracket increased by 104.90 million won to 419.68 million won. The increases in the 5th and 3rd brackets were even larger than the real estate asset size of the 1st bracket.

The 1st and 2nd brackets also showed growth. The 1st bracket increased by 20.52 million won to 87.22 million won, and the 2nd bracket rose by 41.00 million won to 207.18 million won. As asset sizes grew across all income brackets, the real estate asset gap between the 5th and 1st income brackets, which was 10.8 times in 2020, decreased to 9.5 times last year.

On the other hand, the real estate asset gap between high- and low-asset groups widened to 251 times, the largest in four years. Looking at real estate asset sizes by total asset bracket, the 5th bracket (top 20%) increased by 241.83 million won to 1.22767 billion won, while the 1st bracket (bottom 20%) decreased by 1.1 million won to just 4.9 million won. Consequently, the real estate asset gap between the 5th and 1st brackets doubled from 125 times in 2018 to 251 times. Shinhan Bank explained, "The increase in total assets among the top 20% is largely influenced by real estate."

As the proportion of real estate assets within average household assets expands, the share of financial assets is decreasing. Average financial assets increased by 10.8% year-on-year to 71.47 million won, surpassing the pre-COVID-19 level of 69.42 million won in 2019. However, the proportion of financial assets within average household assets fell by 0.9 percentage points to 13.8%, the lowest level in four years. This is interpreted as a result of asset concentration caused by continued real estate price increases.

Examining financial asset sizes by household income bracket in detail, the recovery was clear in the 4th and 5th brackets, which have regained pre-COVID-19 income levels. The 5th bracket increased by 12.3 million won to 146.02 million won, and the 4th bracket rose by 12.34 million won to 82.86 million won, the highest levels in the past four years.

The 1st to 3rd brackets, which have not yet recovered pre-COVID-19 income levels, showed relatively slower recovery. The 3rd bracket increased by 7.83 million won to 61.90 million won, approaching the 2019 level of 62.06 million won, but the 1st and 2nd brackets increased by only 720,000 won and 1.66 million won to 24.40 million won and 42.19 million won respectively, falling short of the 2019 levels (1st bracket 26.14 million won, 2nd bracket 43.39 million won).

Last year, the debt holding rate rose by 4.2 percentage points year-on-year to 66.7%. Although this increase is less than the 9.7 percentage points rise in 2020, the upward trend continued. Shinhan Bank explained, "This is attributed to household financial burdens caused by prolonged COVID-19-related living expenses and rising real estate prices."

The average debt balance of households holding debt last year increased by 16.1% year-on-year to 101.64 million won. This exceeds the average monthly household total income growth rate of 3.0% during the same period. Household debt balances, which were 72.49 million won in 2018, increased by 40.2% over four years until last year. As a result, the debt-to-income ratio expanded from 14 times in 2018 to 20 times. The faster annual growth rate of debt balances compared to income suggests increasing difficulties in debt repayment.

Looking at debt balances by income scale, the gap between income and debt in the 1st bracket widened from 14 times to 26 times over the past four years, and the 2nd bracket also surged from 17 times to 25 times. For the 1st and 2nd brackets, debt balances have steadily increased, while income levels have stagnated or declined since 2020, likely intensifying the burden of debt repayment.

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