"People Who Bought Houses in the Capital Area Last Year Spent a Decade's Worth of Income"

Ministry of Land, Infrastructure and Transport '2021 Housing Survey'
Time Required to Own a Home in the Capital Area Increased by 2 Years in One Year
Seoul PIR Also Rose to 14.1 Times from 12.5 Times the Previous Year
First-Time Homeownership Period Remains at 7.7 Years, Same as Previous Year

[Asia Economy Reporter Cha Wanyong] Last year, the time required for South Korean citizens to own their own home significantly increased. This is a result of soaring housing prices. In particular, in the Seoul metropolitan area, it took 8 years to save enough income to buy a house in the 2020 survey, but last year, this period extended by 2 years to 10 years.

Additionally, the housing conditions for young people remain difficult, with more than 8 out of 10 living in rental housing and residing in an area of 30.4㎡ on average.

Nationwide Increase in Time Required to Own a Home

According to the Ministry of Land, Infrastructure and Transport's announcement of the ‘2021 Housing Survey Results’ on the 21st, the ‘Price-to-Income Ratio (PIR)’ in the Seoul metropolitan area last year was 10.1 times, a significant increase from 8.0 times the previous year. Seoul’s PIR also rose considerably to 14.1 times from 12.5 times the previous year.

The PIR is the ratio of housing price to household income, indicating the period required to buy a house without spending any money from income. If a house was purchased in the metropolitan area last year, it implies that 10 years’ worth of income was spent, and in Seoul, 14 years’ worth of income was used to acquire a home.

The nationwide PIR also increased, rising to 6.7 times from 5.5 times the previous year. Metropolitan cities increased from 6.0 to 7.1 times, and provincial areas rose from 3.9 to 4.2 times compared to the previous year.

The number of years taken to purchase a first home after becoming the head of a household remained the same at 7.7 years last year as the previous year. Despite the rise in PIR, the unchanged period for first-time home ownership suggests that many buyers relied heavily on loans. These individuals are expected to face significant household financial pressure due to consecutive interest rate hikes this year.

The ‘Rent-to-Income Ratio (RIR)’ for rental households nationwide was 15.7%, down from 16.6% in 2020. By region, the metropolitan area recorded 17.8%, metropolitan cities 14.4%, and provincial areas 12.6%, all showing a decrease compared to the previous year.

The proportion of households owning their homes was 60.6% nationwide, unchanged from the previous year, but regional ownership rates varied. The metropolitan area saw an increase from 53.0% to 54.7%, while metropolitan cities (62.2% to 62.0%) and provincial areas (71.4% to 69.0%) showed a declining trend.

The homeownership occupancy rate, indicating owner-occupied housing, also rose in the metropolitan area (51.3%) compared to the previous year, but decreased in metropolitan cities (58.6%) and provincial areas (65.9%).

Still Challenging Housing Conditions for Newlyweds and Young Households

Although the government annually introduces housing support measures for young households (ages 19?34) and newlywed couples (married within 7 years), this survey showed no significant improvements. The housing environment for young people remains difficult.

First, the PIR for young households last year was 6.4 times, higher than 5.5 times the previous year. Most live in rental housing (81.6%), with the highest proportion residing in detached houses. The homeownership rate was only 13.8%.

Notably, the proportion of young households below the minimum housing standard was 7.9%, higher than the 4.5% for general households. The per capita living area was 30.4㎡, smaller than the 33.9㎡ for general households.

Among newlywed households, 43.9% lived in owned homes, with most residing in apartments (72.5%). The PIR increased to 6.9 times from 5.6 times the previous year, and the RIR slightly rose to 18.9% from 18.4% in 2020.

The proportion of newlywed households below the minimum housing standard was 2.4%, lower than the 4.5% for general households. However, due to a larger average household size, the per capita living area (27.5㎡) was smaller than that of general households (33.9㎡).

The most needed housing welfare program for these young groups was loan support. Newlywed couples prioritized ‘housing purchase loan support (49.3%)’, ‘jeonse deposit loan support (27.8%)’, and ‘public rental housing supply with lease-to-own conversion (6.4%)’. Young households responded that the most needed support was ‘jeonse deposit loan support (38.1%)’, followed by ‘housing purchase loan support (23.8%)’ and ‘monthly rent subsidy support (17.4%)’.

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