14 years of salary required to buy home in Seoul

Apartment complexes in central Seoul. Yonhap

By Lee Min-hyung

It takes about 14 years for an average household to purchase a home in Seoul if they save 100 percent of their salary, according to data from the Ministry of Land, Infrastructure and Transport.

The survey ― conducted of 51,000 households here between August 2021 and January 2022 ― showed that people have to save all of their salary for 14 years to buy a home in the capital city. It also took a decade for a household to do so in Gyeonggi Province.

The period when the survey took place was when apartment prices in Seoul and its surrounding areas were at their peak as a result of botched real estate policies and then-near-zero key interest rates. The figure is forecast to decline when compiling data from this year when the housing market abruptly froze and returned most of the gains of the past two years.

The house-price-to-income ratio in the metropolitan area came in at a record high of 10.1 on average in 2021. When the figure goes up, it takes more time for a household to buy a home. The figure for 2020 was eight. The ratio in the region was not that high until 2019, but it ended up soaring to a double-digit figure last year due to overheated market conditions. The figure between 2008 and 2019 was around 6.7 and 6.9.

The house-price-to-income ratio of Seoul topped the list with 14.1 last year. Sejong came in second with 10.8.

However, the rent-to-income ratio for tenants declined to 15.7 percent on average across the nation last year, down by 0.9 of a percentage point from the previous year. That of Gyeonggi Province also dropped to 17.8 percent from 18.6 percent during the same period. But Seoul's rent-to-income ratio increased slightly to 21.6 percent last year from 21.3 percent in 2020. The figure means that Seoul's tenants spent 21.6 percent of their monthly salaries on rent.

The portion of homeowners did not change drastically. Last year, the figure reached 60.6 percent nationwide. Data for the metropolitan area climbed to 54.7 percent, the highest in 13 years since 2008 when the figure reached 56.6 percent. But that of other provincial areas declined.

The increase in homeowners in the metropolitan area was due to a buying spree for apartments, particularly from people in their 20s and 30s last year. Those in the younger age bracket engaged in the panic buying of homes particularly in 2020 and 2021 on fears of then-soaring prices. But with the U.S. Fed and the Bank of Korea starting their aggressive set of rate hikes earlier this year, this sentiment rapidly lost steam.