Bad news as home loans outpace rise in incomesKorean homeowners saw their debts outgrow their incomes last year, data showed yesterday, indicating that the slowing economy and the heavy financial burden caused by housing loans are causing many to become poorer despite owning property.
According to the data offered by the Bank of Korea and Statistics Korea, average household debt among homeowners amounted to 63.53 million won ($56,570) last year, up 12.9 percent from 56.29 million won one year earlier.
Over the same period, their average disposable income grew at the slower rate of 9.3 percent, rising from 33.73 million won to 36.88 million won. As a result, the debt-to-disposable income ratio among homeowners increased from 166.9 percent to 172.3 percent, the data showed.
The figures indicate that people’s financial situations have become harder in recent years as they have needed to pay a larger proportion of their salaries to maintaining their homes.
Last year, homeowners paid an average of 600,000 won every month for housing loans and related costs, a 25 percent rise from one year earlier, the data showed.
Circumstances have become particularly harsh for those who purchased homes by borrowing from banks. A protracted economic slump and rising financial costs for homeownership are causing many to fall into the category dubbed “house poor,” experts said. Hyundai Research Institute put their number at 1.57 million in 2010, but experts believe it spiked last year due to persistently high inflation.
More in Economy
It's a good time to give away residences
Unemployment line adds insult to injury for the jobless
Number of part-time workers hits record high
Closing for good
Those who didn't buy are singing the real estate blues