Half of Seoul Incomes Vanish Into Apartment Payments
Buying an apartment in Seoul now requires spending nearly half of one's salary on loan repayments, data show. The housing purchase burden index—a numerical measure of the cost of buying a home—recorded 185.3 for Seoul in the second quarter of this year in a Korea Housing Finance Corporation survey, up 6 points from the first quarter and the highest level in three years and six months since late 2022.
The housing purchase burden index gauges the principal-and-interest repayment burden a median-income household would shoulder when buying a median-priced home with a standard loan. HF assumes borrowers take out a loan worth 47.9% of the home price and repay it in equal installments over 20 years, with a reasonable repayment burden set at 25.7% of income. Converted to an income ratio, Seoul's 185.3 means actual principal-and-interest payments reach 47.6% of income—up 1.5 percentage points in just three months from 46.1% in the first quarter.
The larger the apartment size, the steeper the increase in burden. For units of 60 square meters or smaller, the index rose from 116.9 to 124.3, while for 60–85 square meters it climbed from 187.1 to 191.5—translating to repayment burdens of 31.9% and 49.2% of income, respectively. In the 60–85 square meter band, which includes the 84-square-meter unit dubbed the 'national standard,' buyers are spending half their income on repayments. For 85–135 square meters, the index rose from 265.1 to 270.2, meaning 69.4% of income must go toward loan payments. Only units above 135 square meters edged down slightly, from 514.6 to 513.4.
The sharp rise in burden reflects not only home prices but also interest rates. In the second quarter of this year, financial bond yields surged amid geopolitical tensions in the Middle East, pushing up mortgage rates as well. Combined with Seoul's continuing price gains, the cost of buying a home has swelled.
Regional gaps have also widened. The nationwide index rose 0.3 points to 61.8 from the first quarter (61.5), marking a third consecutive quarterly increase since the third quarter of last year (59.6), but the rise was concentrated in the capital region. Incheon rose from 65.6 to 66.8 and Gyeonggi from 81.1 to 81.2. By contrast, Busan fell from 61.3 to 60.7, Daejeon from 60.5 to 59.9, and Daegu from 54.9 to 54.4, while Gwangju, Ulsan, and most of Gangwon, Chungcheong, Jeolla, and Gyeongsang regions also declined.
The faster growth in Seoul's home-buying burden compared to the rest of the country is attributed to widening price gaps and housing demand flocking to the capital region.
