Jeonse homes getting even pricierHow long would it take an average urban worker to save up enough money to live in a jeonse (lump-sum deposit) home in Seoul, assuming they don’t take out loans or have other expenses?
More than seven years, according to a study by a real estate research firm Real Today.
The study was based on last year’s average jeonse price along with the average household income of urban workers as of last year’s third quarter, provided by Statistics Korea.
According to the study, the average jeonse price in Seoul was 378 million won ($314,681). The average annual income of urban worker households, excluding single-person homes, was 53.2 million won. That means the jeonse price was seven times larger than what the average urban worker makes in a year.
By region, the areas north and south of the Han River showed a stark contrast in jeonse prices. The average jeonse price in the 11 districts south of the river was 438.86 million won, meaning it would take 8.2 years for an average urban worker to afford a jeonse. The 14 districts north of the river showed an average price of around 303.33 million won, taking the average urban worker 5.7 years.
Among the overall metropolitan areas, it would take 4.2 years to get a jeonse home in Gyeonggi and 3.1 years in Incheon. In the non-metropolitan areas, the most expensive regions were Daegu and Busan, at 3.7 years and 3.1 years, respectively.
Over the past five years, the amount of time it would take for the average worker to rent a jeonse home has gradually increased. This is because jeonse prices have gone up significantly more than the average household income for urban workers. The average annual income grew 2.1 percent last year, from 52.1 million won in 2014 to 53.22 million in 2015, while the average jeonse price jumped 18.6 percent, from 318.64 million won to 378 million won, during the same period.
With the nation’s key interest rates kept low for so long, landlords have come to prefer renting month-by-month, which has reduced the number of jeonse homes. However, demand for jeonse homes has risen, particularly in the Seoul, as massive apartment reconstruction projects have left many looking for homes to move into. As a result, jeonse homes have become more and more expensive.
“Since an upward trend in jeonse prices is expected to continue, the burden for urban workers to save up money to land a deal is likely to get tougher,” said a spokesman from Real Today.
BY HWANG EUI-YOUNG [firstname.lastname@example.org]