`Jeonse` for Seoul apartment equivalent to 6 yrs. of average income of urban workers

February 27, 2014 Leave a comment

`Jeonse` for Seoul apartment equivalent to 6 yrs. of average income of urban workers

2014.02.24 13:46:53

The average ‘jeonse’ price for an apartment in Seoul last year was equivalent to 5.7 years (5 years and 8 months) of income of urban worker households, according to data by Real Estate 114, a Seoul-based real estate information provider, Monday.
Jeonse refers to a lease system in which a tenant pays a large lump-sum deposit for typically a two-year rental period. 
The data shows that it is taking urban worker households a year and a half longer on average to save up to rent an apartment in Seoul compared to five years ago, based on the assumption that households saved the entire income towards the rent.
The jeonse burden relative to income was the highest in 10 years last year across the nation. The average jeonse price in Gyeonngi Province was equivalent to 4.1 years of income, while the national average was 3.3 years.
Real Estate 114 said the calculation is based on the comparison of the jeonse prices of 7.07 million apartments as of the end of December and Statistics Office’ data on income of urban households with more than two family members last year.
The average jeonse price for an apartment in Seoul was 312. 6 million won ($290,270) last year, equivalent to 5.66 times the average urban household income of 55.27 million won.
The price-to-income ratio (PIR) for an average apartment in the Seoul area stood at 4.12 in 2008 in the aftermath of global financial crisis but climbed to 5.28 by 2011.
The rate came down to 5.15 in 2012 before rising to the highest level last year in 10 years for which analysis was made as the increase rate of jeonse price outran income growth rate.
The average jeonse price for an apartment in Seoul increased 12.6% year-on-year last year. In 2012, the average price of getting a jeonse for an apartment in Seoul was 277.7 million won.

Filed under Macro Trends

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