SEOUL, Nov. 28 (Korea Bizwire) – It would take more than 38 years for the young generation of today to save enough money be able to buy an apartment in the capital, if they save all of their disposable income, statistics showed Monday.
The average monthly disposable income for people 39 years old or under came to 3.71 million won (US$3,150) in the third quarter, according to Statistics Korea. The Korea Appraisal Board put the average price of an apartment in Seoul in September at 554.8 million won.
By simple math, people in this age category would be able to buy a home in 12 years and six months if they do not spend any of their pre-tax available earnings, a scenario that economists admit is impossible.
The more realistic picture is that an average person under 39 had a monthly 1.2 million won in disposable income after taxes and other necessary spending, meaning they would have to save for 38 years and six months to have enough money for a home in the capital city.
Details on home-backed loans provided by the Financial Supervisory Service, analyzed by opposition legislator Kim Young-joo, showed that the younger generation rely more heavily on bank loans than other age groups for housing.
As of the end of March this year, home-backed loans by people in their 30s increased 11.5 percent from the end of last year to 10.4 trillion won. For people in their 20s, the loans totaled 9.4 trillion won at the end of March, up 44.6 percent from end-2015.
By comparison, home-backed loans by people in their 40s increased 1.3 percent. For people in their 50s and over, the loans fell in total.
“Real estate prices, including the price of apartments in Seoul, leaped after the government relaxed regulations in 2014,” said professor Baek Woong-gi of Sangmyung University. “Buying their own homes has become something of a top mission for people in their 20s and 30s, and they have no choice but to absolutely cut down on their spending.”