Annual Salary of 80 Million Won, Must Save Every Penny for 11 Years to Buy One House in Seoul

It Takes 11.5 Years to Buy a Median-Priced Apartment
Seoul Housing PIR Slightly Eased Compared to 2 Years Ago

A household earning an annual income of about 80 million KRW would need to save for 11 years without spending a single penny to purchase a median-priced apartment in Seoul.

Seoul Apartment Complex Viewed from Namsan [Image Source=Yonhap News]

According to data from KB Real Estate Data Hub on the 3rd, a household with an annual income of 78.12 million KRW as of the second quarter of this year can buy a median-priced apartment in Seoul after saving for 11.5 years without spending any money. The median price of apartments in Seoul is about 900 million KRW, and the income of 78.12 million KRW represents the median annual income of borrowers who took out real estate mortgage loans for apartments in the Seoul area during that quarter.

Accordingly, the Price to Income Ratio (PIR) in Seoul for the second quarter was 11.5. Although this is lower than 14.8 two years ago, it still clearly shows that owning a home in Seoul remains a distant dream. While housing prices have not changed significantly, the median household income increased from 59.1 million KRW two years ago to 78.12 million KRW, resulting in a lower PIR.

On the other hand, the PIR in the metropolitan area was somewhat more moderate than in Seoul. The PIRs for Gyeonggi and Incheon were 8.9 and 8, respectively, meaning the time required to purchase a home was much shorter than in Seoul. This is thanks to relatively lower housing prices compared to Seoul.

As housing prices show signs of recovery again, Seoul's PIR may increase further. The Seoul apartment sales price index compiled by the Korea Real Estate Board rose by 0.26% compared to the previous week. It has been on an upward trend continuously since the fourth week of March.

Additionally, regional polarization of PIR is intensifying. According to the monthly housing market trend time series from KB Real Estate, the price gap between high-priced and low-priced apartments in Seoul in August this year was the largest since data collection began in December 2008.

The average sale price of the top 20% of apartments in Seoul in August was 2.57759 billion KRW, while the bottom 20% averaged 488.73 million KRW, resulting in a gap of 5.27 times.