This photo taken May 26, 2024, shows apartment complexes in Seoul. (Image courtesy of Yonhap)
SEOUL, Jun. 4 (Korea Bizwire) – A household headed by someone in their 20s would need to save for 86.4 years to afford an apartment in Seoul through savings alone, according to a new analysis that highlights the daunting challenges facing the younger generation in the country’s real estate market.
The study, released on June 3 by Lee Han-jin from the Korean Confederation of Trade Unions Research Center, drew on government data on household finances and KB Real Estate Statistics.
Based on 2023 figures, households headed by someone aged 29 or younger had an average annual income of 41.23 million won. After deducting expenses for consumption (21.36 million won) and non-consumption (5.98 million won), their savable income amounted to 13.89 million won.
With the average sale price of an apartment in Seoul last year at 1.2 billion won, according to monthly averages, it would take setting aside every won of disposable income for 86.4 years to afford a home in the capital.
This timeframe has more than doubled over the past decade, up from 39.5 years in 2014. It peaked at 92.8 years in 2021 when housing prices surged, before easing slightly in the following two years.
From 2014 to 2022, income growth for households headed by people in their 20s was just 21.02%, less than half the rate across all age groups at 45.17%. Their increase in savable income lagged even further behind at 12.65% compared to 64.9% overall. The portion of income that could be saved declined only for this youngest age bracket over the 10-year period.
The report points to widening inequality not just between younger generations and other age cohorts amid the housing affordability crisis, but also among youth themselves in terms of asset accumulation.
While debt levels surged for those in their 20s, modest gains in net worth revealed a stark wealth gap. From 2015 to 2022, the net worth of households headed by people in their 20s fell from 27.86% to just 18.08% of that for households headed by someone in their 40s. The ratio for 30-somethings compared to 40-somethings also dropped from 72.57% to 63.82%.
Inequality intensified within the youth cohort itself, defined as 39 or younger. The ratio of net worth for the top 20% of households versus the bottom 20% jumped from 31.75 times in 2017 to 35.27 times by 2021.
“As asset inequality has deepened with skyrocketing housing prices, the widening wealth gap within the younger generation cannot be explained by income disparities alone – inheritance is clearly a factor,” said Lee. He argued efforts are needed to level opportunities through expanded free education, labor market reforms and increased public rental housing supply.
M. H. Lee (mhlee@koreabizwire.com)
