[News Space=Reporter seungwon lee] With the election of Donald Trump as the 47th President of the United States and the aftermath of the war in Europe, the global economy is becoming increasingly difficult, and the Korean economy, caught in a sandwich situation, is facing increasing uncertainty.

Due to the issue of the extramarital child of movie actor Jung Woo-sung, there is a heated debate among the younger generation about non-marriage and childbirth in Korean society. This issue is ultimately in line with the issues of low birth rate and aging society that Korean society is facing. From another perspective, there is an opinion that in order to solve this problem, the issue of safe housing for young people of marriageable age to live in Seoul must be resolved first.

In the report, “Ultra-low birth rate and super-aging society: causes, effects, and countermeasures for extreme population structure,” the Bank of Korea suggested that the level of housing prices needed to raise the birth rate would be 2015. 2015 was the year that Seoul apartment prices began to rise. Since the Moon Jae-in administration took office in 2017, they have been skyrocketing.

As housing prices skyrocketed, the entire nation began to take an interest in real estate, and the term “sudden poverty” was coined. Even luxury apartments in Gangnam were worth 6 billion won based on the national average. This means that the era of saving up my salary to buy a house in Seoul is gradually fading away.

The median apartment sale price in Seoul, which had been at the 400 million won level since 2012, entered the 500 million won range for the first time in 2015. Since then, it has increased by about 100 million won every year since 2017, reaching 940 million won in July 2021. In other words, it means that you need at least 1 billion won to buy an apartment in Seoul.

According to the Bank of Korea's analysis of Numbeo, a major country price statistics comparison site, Seoul's price-to-income ratio (PIR) was calculated to be 25.1 times (as of June 7, 2024). This number means the time it takes to purchase a house at the median income level in the Seoul area. In other words, it is estimated that it will take more than 25 years for a median-income household in Seoul to own a house.

That is, assuming that the Seoul PIR is typically 10 times (KRW 1 billion / total household income of KRW 100 million), and that disposable income after deducting non-consumption expenditures such as taxes and interest is KRW 70 million, the Numbeo-style PIR is calculated to be approximately 14 times (KRW 1 billion / disposable income of KRW 70 million).

This is higher than New York, USA and London, UK, which are notorious for their high housing costs. Compared to income levels, the housing prices in Seoul are already beyond imagination. It takes citizens of major cities around the world, such as Paris (17.8 times), Rome (15.1 times), London (14.8 times), and New York (14.0 times) to work more than 10 years longer to be able to afford a home.

According to Numbeo, Korea’s PIR level fell from 8th place (21.3 times) in 2009 to 10.4 times in 2013, and then to 51st place (11.4 times) in 2014. When housing prices fell during the early days of the Lee Myung-bak and Park Geun-hye administrations, Korea’s housing prices were in the middle of the 115 countries included in Numbeo’s statistics. However, under the Moon Jae-in administration, Korea’s PIR rose to 9th place (29.4 times) in 2022. 

As people flocked to Seoul in search of jobs, the population density increased rapidly, and as demand eventually poured into Seoul, housing prices soared. Naturally, marriage and childbirth were postponed.

Although housing prices have fallen by 10-15% since the Yoon Seok-yeol government took office, disposable income has not increased significantly due to inflation. As of the end of June this year, the housing purchase burden in other advanced countries, such as Japan (11.3 times), Germany (9.4 times), the UK (9.1 times), Australia (8.4 times), and the US (3.3 times), is only about half of ours.

Countries with higher housing affordability burdens than Korea include Syria (112.2), Ethiopia (50.3), Cuba (47.8), Nepal (33.3), Hong Kong (30.0), China (29.4), and Vietnam (22.6).