Korea’s wealth surged on personal real estate

Korea’s wealth surpassed 12,000 trillion won ($10.2 trillion) in 2015, owing to growth in nonfinancial assets.

According to the Bank of Korea (BOK) on Tuesday, total national assets continued growing last year and reached 12,359.5 trillion won, up 5.7 percent from a year earlier.

That amount was 7.9 times larger than the country’s nominal gross domestic product for the same year, the central bank said.

The growth was mainly led by a 4.6 percent increase in nonfinancial assets, largely real estate. Total nonfinancial assets stood at 12,126.5 trillion won, accounting for 98.1 percent of total assets on the national balance sheet, according to the BOK.

Koreans prefer properties that provide stable cash flows as their main assets over volatile financial assets such as stocks and bonds.

Property assets accounted for 54.2 percent of the total nonfinancial assets, the data showed, slightly up from 53.6 percent the previous year.

By type, assets created by manufacturing, construction, mining and agriculture totaled 5,508.9 trillion won, accounting for 45.4 percent of the nonfinancial assets. They grew 3.1 percent year on year.

Among non-production assets, land saw a 5.9 percent increase in value, leading the overall growth.

“Growth in land assets slowed since the global financial meltdown, but it gained momentum since 2014 as construction of new innovative cities and Sejong City as well as developments in Jeju helped boost the assets,” said Jeon Seung-cheol, director general at the BOK.

Seoul’s total land assets were valued at 1,685.3 trillion won as of last year, accounting for 27.1 percent of the total. But Jeju showed the highest growth in land assets, a 21.5 percent year-on-year growth.

Total financial assets showed an 8.2 percent year-on-year growth in 2015, but net financial assets, excluding financial debt, was 233 trillion won. The amount of debt surged 7.2 percent, the report said,

Korea’s household debt hit a new record of 1,200 trillion in 2015, as many people purchased residences to take advantage of low interest rates.

Total household debt stood at 1,223.7 trillion won as of March, according to the central bank.

BY SONG SU-HYUN [song.suhyun@joongang.co.kr]