Home prices, rents grow faster than income

In Korea, it takes more than a decade for the average salaried worker to buy his or her own house, as numerous surveys have shown over the years.

But now it looks like renting homes has become equally trying, according to data released by a local property-information portal on Friday.

Real Estate Bank said “jeonse” costs are surging as more people opt to rent homes instead of buying them, not to mention that growing inflationary pressure is pushing prices up in all sectors including real estate.

Jeonse is a unique Korean rent system under which homes are rented out, usually for two years at a time, in return for a lump sum of key money.

After analyzing incomes and renting costs, Real Estate Bank said that families would have to save their entire income for five years and two months in order to rent a 33-pyeong (109 square meters) house in Seoul.

As of April this year, families in Seoul city earned an average 3.9 million won ($3,580) per month, which was up 3 percent from the 3.8 million won in April in the previous year.

In comparison, the rent for 109 square-meter housing rose more than 15 percent to 248 million won ($227,000) in April from the 215 million won last year.

A 109 square-meter home usually consists of three bedrooms and two bathrooms and is considered an ideal size for a family of three or four.

Real Estate Bank said it takes about five years for families with such income to rent a home of this size.

Jeonse was more expensive in the affluent Gangnam district where 109 square-meter homes were priced from 295 million won to a maximum 426 million won, meaning it takes much longer to rent homes there.

Homes located north of the Han River, such as Seodaemun district, cost around 165 million won, which would mean the average salaried worker could rent a home after saving for three years and four months.

By Kim Ji-hyun (jemmie@heraldcorp.com)