Last Year, Owner-Occupancy Rate Increased... But Housing Burden for 'Sudogwon Renters' Soars

Ministry of Land, Infrastructure and Transport Announces 2019 Housing Survey Results

Apartment complexes in the Gangnam area of Seoul (Photo by Yonhap News)

[Asia Economy Reporter Moon Jiwon] Last year, the nationwide homeownership rate reached 58.0%, marking the highest level since 2006. Additionally, the time required to purchase a first home in one's lifetime and the duration of being without a home for non-homeowning households were 6.9 years and 11.2 years respectively, both showing a decrease compared to the previous year. However, the homeownership and home possession rates for newlywed couples slightly declined compared to the previous year, and the housing cost burden for tenants increased further.

According to the '2019 Housing Survey Results' announced by the Ministry of Land, Infrastructure and Transport on the 1st, the proportion of households living in owned homes nationwide last year was 58.0% of all households, steadily increasing since 2014 and showing the highest figure since 2006.

The proportion of households owning homes also steadily increased to 61.2% last year. Although the home possession rates in the metropolitan area (54.2%→54.1%) and metropolitan cities (63.0%→62.8%) slightly decreased, the home possession rate in provincial areas rose from 70.3% to 71.2%.

◆Housing Stability for Newlywed Couples Declines= For newlywed couple households, the homeownership rate fell from 50.7% in 2018 to 49.3% last year. The home possession rate also decreased from 53.9% to 52.8% during the same period. This suggests that housing stability for newlywed couples is somewhat lower compared to general households.

The proportion of jeonse (long-term lease) households (31.6%) was significantly higher than that of general households (15.1%). The rent-to-income ratio (RIR) for newlywed tenant households, which rent their homes, increased from 19.2% to 20.2% last year, indicating a growing rent burden.

However, the Ministry of Land, Infrastructure and Transport stated, "The proportion of households responding that rent and loan repayments are burdensome has decreased."

The proportion of newlywed households below the minimum housing standard (3.9%) was lower than that of general households (5.3%), but the per capita living area (24.6㎡) was smaller compared to general households (32.9㎡).

This is interpreted as due to the average household size of newlywed couples (2.99 persons) being larger than that of general households (2.43 persons).

Proportion of Jeonse and Monthly Rent Among Tenant Households (Source: Ministry of Land, Infrastructure and Transport)

◆Youth Households: Increase in Jeonse and Reduced Housing Cost Burden= Among youth households, single-person households (59.2%) accounted for more than half, with most living as tenants (77.4%). Last year, the proportion of jeonse households among youth tenant households increased (32.0%→35.1%), while the proportion of monthly rent households decreased (68.0%→64.9%).

The RIR for youth tenant households decreased from 20.1% in 2018 to 17.7% last year. The RIR for youth tenant households residing in the metropolitan area also slightly decreased (20.8%→19.3%), indicating a somewhat eased housing cost burden.

Last year, the rate of youth households below the minimum housing standard (9.4%→9.0%) and the proportion of households living in basements, semi-basements, and rooftop rooms (2.4%→1.9%) significantly decreased, while the per capita living area (27.3㎡→27.9㎡) increased, reflecting an improvement in housing quality.

For elderly households, most lived in owned homes (76.9%), with both homeownership rate (75.7%→76.9%) and home possession rate (77.5%→78.8%) slightly increasing compared to the previous year.

Elderly households had a higher housing cost burden relative to income than general households due to less income activity, but since most lived in owned homes, their rent and loan repayment burdens were lower than those of general households.

(Data from the Ministry of Land, Infrastructure and Transport)

◆Housing Burden for Tenants in the Metropolitan Area Increases... 6.9 Years to Purchase First Home= Last year, the rent-to-income ratio (RIR) for tenant households nationwide was 16.1% (median), slightly up from 15.5% in 2018. A higher RIR indicates a greater housing cost burden relative to income.

By region, the metropolitan area had the highest RIR at 20.0% (18.6% in 2018), followed by metropolitan cities (16.3%) and provincial areas (12.7%).

The price-to-income ratio (PIR), which is the ratio of home price to annual income for homeowning households, was 5.4 times nationwide (median), down from 5.5 times in 2018. By region, it was highest in the metropolitan area (6.8 times), followed by metropolitan cities (5.5 times) and provincial areas (3.6 times), with all regions showing a decrease compared to 2018.

The time required to purchase a first home in one's lifetime was 6.9 years last year. This period has consistently remained around 7 years, with 6.9 years in 2014, 6.7 years in 2016, and 7.1 years in 2018.

(Photo by Yonhap News)

◆More Frequent Housing Moves in Metropolitan Area and Tenant Households... 84% of Citizens Say "Housing is Essential"= The average housing residence period for all households last year was 7.7 years, unchanged from 2018. Homeowning households lived in their homes for 10.7 years, much longer than tenant households (3.2 years), and by region, provincial areas (10.0 years) and metropolitan cities (7.4 years) showed higher housing continuity than the metropolitan area (6.3 years).

The actual housing mobility rate was 20.3% for homeowning households and 60.9% for tenant households, with the metropolitan area (40.3%), metropolitan cities (35.5%), and provincial areas (30.9%) showing this order of high rates.

Comparing the current residence with the previous one, the proportion of households moving upward, such as from jeonse to owned homes (28.6%), was higher than those moving downward (8.2%).

Last year, 84.1% of citizens responded that "housing is essential," an increase from 82.5% in 2018, indicating a growing recognition of the need for housing. The main reason for wanting to own a home was housing stability (89.7%), followed by asset accumulation (7.1%) and retirement living funds (3.3%).