Buying a home in Seoul becomes tougher in 2021

Saving income to buy a house in South Korea has become more difficult and taking longer, according to a report by the Ministry of Land, Infrastructure and Transport released on Dec. 21.

The real estate report covered surveys conducted between August 2021 and January 2022 for 51,000 households in the country. The ratios used in the report applied Koreans’ median income and median prices in properties.

The housing price to income ratio (PIR) in Seoul rose to 14.1 in 2021 from 12.5 in 2020, which means one can only buy a property if they save their income for 14.1 years without spending any money.

In the greater Seoul area, the housing PIR hit a record-high 10.1 last year, up from 8.0 in 2020. The figure, which was between 6.7 and 6.8 during 2008-2019, jumped over the past two years due to soaring housing prices under former President Moon Jae-in administration.

The ratios in Sejong city, the de facto administrative capital of Korea, and Gyeonggi Province, which surrounds Seoul, were respectively 10.8 and 9.9 last year.

The rent-to-income ratio (RIR) in Seoul slightly increased from 21.3% in 2020 to 21.6% last year, which means tenants in Seoul spend such percentage of their monthly income on rent. 

In comparison, the RIR nationwide fell from 16.6% in 2020 to 15.7% last year. The ratio in the greater Seoul area also declined from 18.6% to 17.8% during the same period. 

A homeowner takes 7.7 years to buy their first house in Korea, the report said. The figure hit 8.5 in 2010, fell to 6.9-7.1 during 2014-2019 and rose to 7.7 in 2020 for the first time. 

More people think it is essential to buy a house, the report showed. Some 88.9% of the correspondents said they need to own at least one home, up from 87.7% in the previous year. The homeownership rate in the country reached 60.6%, the same as the percentage in 2020.

Some 81.6% of householders between the age of 18 and 34 rented their places last year. The young people’s RIR reached 16.8%, which means they spend the percentage of their income on rent. Some 43.9% of newlywed couples live in their own houses, the report found.

Average residential area per capita amounted to 33.9 square meters, same as the figure in 2020.

Write to Hye-In Lee at hey@hankyung.com
Jihyun Kim edited this article.