S. Korea's property price-to-income ratio falls, Gangnam weathers trend
Published : 2014-07-08 13:14
Updated : 2014-07-08 13:14
The level of house prices in comparison with income in South Korea is trending lower, with the exception of the posh Gangnam area, where property prices still run high, data showed Tuesday.
The so-called price-to-income ratio (PIR) came in at 23.4 in Asia's fourth-largest economy last year, nearly halving from an average of 42.3 between 1986 and 2013, according to the data by the Bank of Korea and Kookmin Bank.
The ratio roughly provides a clue to whether housing prices are expensive or cheap given a family's disposable income.
The benchmark reading of 100 is based on the level from 1986, when relevant institutions began to compile the data.
The PIR in the 11 wards south of the Han River, loosely categorized as Gangnam, however, came in at 47.5, almost twice the nationwide figure.
Compared with the average data between 1986 and 2013, the PIR in the 11 wards also fell at a slower pace, slipping 20.5 percent.
The data indicates an improvement in South Koreans' capacity to purchase homes, but still reflects the need to rely on external capital to buy houses in Gangnam.
The data comes as finance minister nominee Choi Kyung-hwan has raised hopes he may push to ease regulations, such as the loan-to-value (LTV) and debt-to-income (DTI) rules, to boost the sluggish property market.
Critics, however, have raised concerns that such deregulation may further stoke the country's already heavy household debt. (Yonhap)