Seoul Home Price Polarization Hits 112-Year High

The price gap in Seoul's housing market has widened to its largest extent in four years and three months.

This means that households in the bottom 20% of income earners would need to save for over 112 years, without spending a single penny of their annual income, to catch up to the highest housing price levels. According to KB Real Estate, the indicator for housing purchasing power (PIR, Price to Income Ratio) for households in the bottom 20% of income reached 112.7 as of the end of March this year, marking the highest figure since December 2021 (113.7). PIR is calculated by dividing housing prices in a specific region by the average household income, and a higher number indicates a larger gap between housing prices and income.

The PIR required for a household in the first income quintile to purchase housing at the bottom 20% level in Seoul was 8.7, an increase from 8.0 in December last year. For households in the third income quintile, the PIR for housing in the third quintile rose from 10.3 at the end of last year to 10.5 in March this year. Conversely, for households in the top 20% (fifth quintile), the PIR for housing in the fifth quintile decreased from 18.1 at the end of last year to 17.0 in March this year. As of the end of March, the average transaction price for housing in the first quintile in Seoul was 511.63 million won, 1.20157 billion won for the third quintile, and 3.46065 billion won for the fifth quintile. The price difference between housing in the top 20% and the bottom 20% reached approximately 2.95 billion won.

With demand for non-homeowners staying in the rental market, Seoul's Jeonse PIR (J-PIR) rose to 43.9, hitting a 41-month high.