Housing cost of monthly tenants outstrips homeowners’ for first time in Seoul metro area
February 25, 2014 Leave a comment
Housing cost of monthly tenants outstrips homeowners’ for first time in Seoul metro area
2014.02.18 16:28:00
South Korea’s housing cost of tenants paying monthly rents surpassed that of homeowners for apartments in Seoul and the surrounding areas for the first time, as monthly rents have risen while interest rates fell, according to a survey.
As the real estate market shows clearer signs of recovery, the increasing burden on tenants and reducing burden on purchasing houses are forecast to drive up the demand for buying home.
The housing cost of monthly renters exceeded that of owners of major apartment complexes in Seoul and the surrounding metropolitan areas in April of last year, said Swiss investment bank Credit Suisse Tuesday after comparing the costs.
This is the first time the housing cost of monthly renters surpassed that of homeowners since data on housing cost of the two groups began in 2004.
Housing cost of monthly renters rose modestly but that of homeowners dropped. As of October last year, the housing cost of monthly tenants stood at 2.99 percent of home prices and that of homeowners 2.59 percent, closing the gap to 0.40 percentage points.
To calculate the annual housing cost of renters, interests arising from depositing the security deposit, or opportunity cost, were combined with monthly rents. The housing cost of homeowners was derived from interests arising from depositing the home price.
Other costs such as tenants’ cost of moving, and homeowners’ tax and repair and maintenance cost were almost similar and would offset each other, so the costs were excluded from the analysis, Credit Suisse said.
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