Less affordability of buying apartment unit with loans

A study found that the number of affordable homes in Seoul for the median income group with a loan saw a remarkable drop as housing prices started skyrocketing.

A report on the status of K-HAI (Housing Affordability Index) in metropolitan cities and provinces from 2017 to 2021 submitted by the National Assembly Budget Office to Rep. Jeong Woo-taek of the People Power Party showed that Seoul’s index in question dropped to 2.7 percent last year from 16.5 percent in 2017. The index measures a percentage of apartment housing units in a region at an affordable price level that the median income bracket can purchase financed by any loan given household net worth and income levels.

Five years ago, median income households could find 16 to 17 out of 100 apartment units affordable in Seoul even with a loan taken out. However, they were only able to see three candidates under budget last year. During the same period, the index in Gyeonggi Province and Incheon went down sharply from 51.3 percent to 26.2 percent and 52.9 percent to 32.5 percent, respectively.　

The K-HAI of median income households in 17 cities and provinces was 44.6 percent last year, down by as much as 14.1 percent points from 58.7 percent in 2017.　

As of last year, the median income levels of single-member, two-member, three-member and four-member households were at 1.82 million and 7,831 won, 3.08 million and 8,079 won, 3.98 million and 3,950 won and 4.87 million and 6,290 won, respectively.

“It gets harder to buy a house with labor income in Seoul,” said Professor Kwon Dae-jung of real estate at Myongji University. “As housing prices go up at a faster pace than income levels, measures need to be taken swiftly to help actual home buyers get a house.”


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