Young Adults' Asset Gap Between Top and Bottom 35 Times... Parental Support and Home Purchase Make the Difference

Asset income accumulates much faster than earned income
Parental support → home purchase → significant impact on asset growth
Housing stabilization needed to reduce asset gap
Support for first-time homebuyers lacking initial capital (Heuksujeo) also required

Photo by Asia Economy

The asset gap within the 2030 youth generation is widening. The asset gap between the top 20% and the bottom 20% reached 35 times. It is generally assessed that earned income alone is insufficient to explain this level of asset disparity.

Amid this, a study highlighting that intergenerational asset transfers and housing capital gains significantly impact asset inequality has drawn attention. The gains obtained from rising housing prices are substantial, making it difficult to reduce the gap through income alone. Purchasing a home requires a large initial capital, and intergenerational transfers such as parental assistance during this process are also analyzed as factors that deepen inequality.

◆Parental Assistance and Housing Gains Contribute Most to Asset Inequality

According to a recent report titled "A Study on Determinants of Asset Inequality" published by the Korea Research Institute for Human Settlements on the 21st, intergenerational asset transfers such as gifts and inheritance, along with housing capital gains, contribute significantly to asset inequality. The amount of intergenerational asset transfer contributed the most, followed by housing capital gains.

Contrary to common perception, homeownership showed a relatively low contribution to asset inequality. This appears to be because homeownership itself contributes less to producing asset inequality, whereas the capital gains arising from rising housing prices after homeownership contribute more to asset inequality.

In particular, intergenerational asset transfers occur through the medium of housing, which affects the asset accumulation speed of those who receive parental assistance. The speed of asset accumulation can vary depending on whether one can secure initial equity capital. However, 'Heuksujeo' households, who cannot receive parental help and lack initial equity capital, find it difficult to own a home.

Once a home is purchased with parental assistance, the impact of increased asset income from rising house prices is significant, and these differences in asset accumulation speed deepen asset inequality. Especially in the current environment of strict loan regulations and high housing prices, it is difficult to secure initial capital through earned income alone.

Minjun Oh, a senior researcher at the Korea Research Institute for Human Settlements, said, "As housing capital gains have been confirmed to affect asset inequality, inducing asset price stabilization through housing market stabilization can alleviate social polarization in the long term." Stabilizing the housing market thus also plays a role in mitigating asset inequality caused by rising housing prices.

He also suggested, "Efforts to reduce asset inequality are needed by providing equal opportunities for asset accumulation through support for housing acquisition, which requires a large initial fund." Measures to lower entry barriers to homeownership, focusing on actual demanders such as newlyweds and first-time homebuyers, are possible.

Along with affordable housing supply, easing entry barriers through financial support centered on actual demanders is also necessary. Researcher Oh emphasized, "Ultimately, efforts to reduce asset inequality are needed by providing equal opportunities for asset accumulation through support for housing acquisition, which requires a large initial fund."

◆Top 20% Youth Assets 1 Billion KRW, Bottom 20% 27.8 Million KRW... Gap Widens

Meanwhile, the asset gap within the 2030 youth generation has widened compared to a year ago.

According to an analysis of microdata from the Household Finance and Welfare Survey by Kim Hoe-jae, a member of the Democratic Party of Korea, the average assets of households headed by people in their 20s and 30s as of the end of March last year were 356.51 million KRW, an increase of 38.02 million KRW from a year earlier.

The asset gap between the top 20% households (981.85 million KRW) and the bottom 20% households (2.84 million KRW) was 35.27 times, expanding from 35.20 times the previous year.

The top 20% income group's current income (128.32 million KRW) increased by 7.42 million KRW (6.1%) compared to a year ago, and the bottom 20%'s current income (19.68 million KRW) rose by 1.31 million KRW (7.2%). Although the income gap is significant, it is insufficient to explain the asset gap within the youth generation. This implies a fundamental difference in assets received from parents or others.

Rep. Kim said, "It is difficult to explain an asset gap of 35 times by income disparity alone," adding, "Starting life with an insurmountable gap from the starting line is unfair."

He continued, "It is a critical time for a just transition to resolve economic inequality," and said, "A ladder of fairness must be established so that young people without 'parental chances' can also close the gap."