A realtor’s office displaying signs for home leases and home sales on Oct. 2, 2018. A sign lists the sale price of a 109-square-meter apartment near in Songpa, one of Seoul’s most affluent wards, at 1.83 billion won (US$1.6 million). (image: Yonhap)
SEOUL, Dec. 4 (Korea Bizwire) — Despite soaring real estate prices across South Korea, income levels have remained stagnant, making the purchase of a home even more of an unachievable “dream.”
Real estate assets account for 68.2 percent of all assets on average for Koreans. This means that volatility in the real estate market can only create a polarization of different income classes.
According to KB Kookmin Bank, the price-to-income ratio (PIR) for the 3rd quarter based on national average incomes and real estate prices was 5.5, which was 0.3 points lower than the 2nd quarter.
The index indicates that it would require someone to work 5.5 years without spending a single cent from his or her salary to buy a house. But when the stats for Seoul are set apart, the story is different.
The PIR for the 3rd quarter in Seoul was 13.4, which was the highest since the numbers were first tabulated in 2008.
The reason for the high PIR number in Seoul is because the increase in real estate prices has outpaced growth in household income.
H. S. Seo (hsseo@koreabizwire.com)
