12 1/2 years of saving needed to buy Seoul apartment

By 임정요

Published : Nov. 28, 2016 - 09:46

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Koreans in their 20s and 30s have to save up all of their disposable income for more than 12 years to purchase an apartment in Seoul, which now costs an average 554.8 million won ($474,300).

The average monthly disposable income of those younger than 39 years old stood at 3.71 million won in the third quarter of 2016, data from Statistics Korea showed Monday.

The Korea Appraisal Board tallied the average sales price of an apartment in the capital at 554.8 million won for September.

Based on the figures, it would take 12 1/2 years for those under 39 years old to save enough money to buy an apartment in Seoul, if they were able to save all of their disposable income. More realistically, those in the age group would probably be able to save about 1.2 million won every month, which would extend the savings period to 38 1/2 years.

Yonhap

Meanwhile, the prices of apartments in the capital continue to soar.

The average selling price of apartments in 11 popular wealthy districts, located in the southern part of Seoul, reached 7.85 billion won, surpassing 7 billion won in October for the first time since 2008, according to data from KB Kookmin Bank.

Expensive apartments in the capital have been highlighted as a social and economic problem in Korea.

A report by the state-run Financial Supervisory Service showed that as of March, housing mortgage loans taken up by people in their 30s stood at 10.4 trillion won, up 11.5 percent compared to the end of last year.

In the cited period, loans for those in their 20s rose 44.6 percent to reach 9.4 million won, while people in their 40s borrowed 1.3 percent more.

The comparative number for house-back loans decreased for those in their 50s and 60s. The trend reflects a surge among the younger generation who are taking house-backed loans to buy homes.

On Nov. 3, the government rolled out a real estate policy package that aims to restrict the letting out of apartments in regions where the property market is heating up.

This month, however, the average bidding price of apartments in three of the four restricted districts in Gangnam rose 0.75 percentage points compared to October, reaching the highest levels seen since last February, according to local real estate auction information provider GG Auction. The policy does not regulate apartment auctions.

“The interest rate is low these days. So an increase in mortgage loans made by people in their 20s and 30 is not problematic, as long as money is lent to those who can pay back,” said Cho Joo-hyun, a professor at Konkuk University’s department of real estate studies.

“But currently lenders’ interest rate is based on floating interest. This means the interest rate may surge or further plunge, depending on changes made in the market. The government has to implement measures aimed at protecting lenders in case the interest rate soars too much,” Cho added.

By Kim Bo-gyung (lisakim425@heraldcorp.com)

12 1/2 years of saving needed to buy Seoul apartment

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