Owning a home in Seoul becomes more distant dream for low income class

2019.10.08 15:36:46 | 2019.10.08 15:37:09

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It would take more than 21 years for the bottom-income class to own a home in South Korea only if they save entire income, and nearly 50 years in the capital Seoul, a study found on Monday.

According to data released by Kim Sang-hoon, a lawmaker from the main opposition Liberty Korea Party, the price-to-income (PIR) ratio for the bottom quintile income group stood at 21.1 as of the second quarter this year, up 4.7 from 16.4 in the same quarter in 2017 when the Moon Jae-in government took office.

The PIR, the ratio between median house prices to median annual household income, is a measure for housing affordability in a particular. The latest reading means that the lowest 20 percent income earners could buy an averagely-priced house if they save every penny they earn for 21.1 years.

On the other hand, the PIR for the richest 20 percent group barely changed over the period at 2.8 in 2017 and 3.0 in 2019. The gap between the top and bottom quintiles widened from 13.6 to 18.1.

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The ratio for the lowest income earners jumped 15.6 from 33.1 in 2017 to 48.7 in 2019 in Seoul which showed skyrocketing housing prices and widening income disparities over the period. The reading for the richest group went up 1.2 from 5.7 to 6.9 over the last two years.

Home ownership becomes more unattainable dream for low-income households as the home prices are showing no signs of easing despite the government’s strong crackdown on speculative home buying in the real estate market. Apartment prices in Seoul fell just 1.79 percent in Seoul during the first half of this year amid the government’s multiple regulations on loans and tax hikes, after surging 27.09 percent from 2014 to 2018.

By Lee Ji-yong and Choi Mira

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