SEOUL, Korea, Sep 11 (Korea Bizwire) – According to a research report “International Comparison of Housing Prices and Implications for Korea” published on September 10 by KB Financial Group’s Management Research Institute, the total value of real estate held by Korea’s households as of the end of 2012 was about US$5 trillion, 436 percent of the nation’s GDP. The comparable figures for the United States and Japan were $18.5 trillion (114%) and $10.2 trillion (171%), respectively.
As for the amount of per-capita real estate assets as well, Korean households beat all other countries at $100,500, much more than those for American ($56,600) and Japanese ($82,000) counterparts. This is, the report said, due to the extremely high percentage of real estate assets held by Korean households at 75.1 percent of all assets. The comparable figures for American (35.1%), Japanese (40.9%), and British (50.1%) households were more than 25 percentage points lower.
The housing price-to-income ratio (PIR) of Korean households was measured at 4.8, lower than those of Australian (5.6), Japanese (5.3), and British (5.1) households but higher than those of Canada (3.6) and the United States (3.1). The United Nations Human Settlements Program recommends the proper level of the PIR at 3.0 to 5.0. But the PIR of Seoul is 9.4, higher than those of the world’s most expensive cities such as Sydney (8.3), London (7.8), Tokyo (7.7), New York (6.2), and Los Angeles (6.2).
The report also said, “Given Korea’s housing price is still high vis-à-vis income level, we believe there is more room for further decline in home prices. Even though there is little possibility of a real estate market collapse seen in Japan and the U.S., it may be wise for anyone to be ready for a long-run downturn.”