"Why Am I So Strapped?"... 58% of People Feel Deprived Due to Housing Cost Burden

KuktoYeon 'Housing Cost Burden and Deprivation' Report
Reduced Health and Entertainment Spending Due to Housing Cost Overburden
Greater Sense of Deprivation Felt by Low-Income and Tenant Households
"Support for Housing Costs, Interest + Homeownership Assistance"

Photo by Yonhap News

Due to the rapid surge in real estate prices and the resulting increase in housing cost burdens, it has been found that 6 out of 10 citizens experience subjective deprivation. In particular, tenant households and low-income groups felt this deprivation more intensely.

On the 14th, the Korea Research Institute for Human Settlements published a report titled "The Impact of Housing Cost Burden on Socioeconomic Deprivation," analyzing how housing cost burdens affect individuals' lives both objectively and subjectively through the relationship between housing cost burden and 'deprivation.' Deprivation was defined as "a state in which various needs are unmet due to a lack of material and social resources."

Surveying 500 household heads aged 20 and above nationwide about their personal basic values and current housing status, many recognized housing as an essential element for maintaining quality of life, but a gap was found between ideal housing and reality.

"I feel deprived when comparing what I have to what others have" (6 out of 10 people)

When comparing what they have to what the general public has, 58% of respondents said they "feel deprived." Tenant households and households below the minimum cost of living statistically recognized subjective deprivation significantly more than other households.

Using deprivation indicators from the 15th Korea Welfare Panel Survey to measure absolute deprivation reflecting absolute poverty levels in 2020, about 34% of the analyzed households experienced housing deprivation, and about 7% experienced non-housing deprivation.

Even after controlling for general household characteristics such as income, household head age, and assets, households with excessive housing cost burdens had an increased probability of experiencing absolute deprivation.

Excessive housing cost burdens also affected consumption expenditures on entertainment culture, education, food and lodging, among others.

Analysis using the Household Income and Expenditure Survey showed that households with excessive housing cost burdens spent less on most items excluding housing costs, and the proportion of expenditures on entertainment culture, education, food and lodging, and other goods and services was also smaller in total consumption expenditure.

Even after controlling for household size, household head age, residential area, income, and tenure type, households with excessive housing cost burdens showed statistically significant differences in expenditures on health, entertainment culture, meat consumption, fresh seafood consumption, fruit consumption, vegetable consumption, dental treatment costs, hospitalization costs, and dining out expenses.

"Housing burden is life burden... Housing cost burden must be alleviated"

The institute stated, "The analysis results show that household housing cost burdens affect expenditures in areas other than housing consumption, and through this, the overall socioeconomic status and the perceived quality of life are also influenced. This ultimately highlights the high necessity of alleviating housing costs."

In particular, it was analyzed that low-income tenant households, which have relatively high housing cost burdens, also have high levels of both objective and subjective deprivation, indicating an urgent need for policy support.

Associate Research Fellow Jo Jeong-hee suggested, "Housing cost burdens can affect not only housing but also expenditures in other areas, as well as an individual's socioeconomic status and perception of life, so the need to alleviate housing cost burdens is high," proposing ▲expansion of support for low-income tenant households, ▲support for homeownership, and ▲management of interest rate burdens.

He added, "It is necessary to expand housing cost support for low-income tenant households who experience relatively high levels of deprivation," and "consideration can be given to expanding the eligibility and support (including management fees) for housing benefits."

He also said, "To enable housing upgrades for tenant households, it is necessary to consider expanding the supply of affordable housing and support for first-time home purchases."

Finally, he emphasized, "In preparation for increased housing cost burdens due to rising interest rates on mortgage loans in the future, it is necessary to actively consider measures such as safe conversion loans and protection plans for delinquent borrowers."

◆Average Monthly Housing Cost Expenditure for a Four-Person Household is 542,000 KRW

Meanwhile, analyzing the 2020 status using the 15th Korea Welfare Panel Survey, the average monthly housing cost expenditure per household, adjusted for household equivalence for a four-person household, was approximately 542,000 KRW.

Owner-occupied and jeonse (long-term deposit lease) households had a high proportion of principal and interest repayments on mortgage loans, while monthly rent households had a high proportion of monthly rent payments. Utility costs such as water, electricity, and heating accounted for a high proportion regardless of tenure type.

Using representative methods to measure housing cost burden capacity, the 'ratio approach' and the 'residual income approach,' the analysis of household housing cost burden levels showed that under the ratio approach, the proportion of households with housing cost burdens exceeding 20%, 30%, and 50% of income were 17.73%, 7.45%, and 2.69%, respectively.

Using the residual income method, which defines households as having excessive housing cost burdens if their residual income after housing costs is less than the minimum cost of living for non-housing expenditures (i.e., appropriate non-housing consumption expenditure), 32.53% of the analyzed households were identified as having excessive housing cost burdens.

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