Urban workers find buying a home more burdensome

Buying a home become more burdensome in Q4 of 2010 owing to lower household income and higher housing prices

Urban workers are reportedly more burdened when buying a home, most likely owing to a reduction in household income and rising home prices. 

The Korea Housing Finance Corporation (KHFC, CEO Joo-jae Lim) announced on March 24, 2011 that a survey of the Korea Housing Affordability Index (K-HAI) conducted in the end of December 2010 showed a higher national average index of 68.5, up 1.3 points from the end of September 2010 (67.2). 

Introduced by KHFC in 2008, the K-HAI index with a lower number indicates that more households can afford to purchase a home. An index of more than 100 indicates difficulty in repaying a home loan.

KHFC stated that the burden of buying a home, which had fallen continuously from the start of 2010, went back up at the end of December 2010 owing to lower household income (down 1.7 percent from the previous quarter, nationwide) and higher home prices, all despite a fall in mortgage loan interest rates. 

By region, the index was up from the previous quarter in all regions except the Gyeonggi area. Most notably, the index for the Busan area was up for three consecutive quarters from the second quarter of 2010 due to a rise in home values. The index for the Gyeongsangnam-do province was up for two consecutive quarters from the third quarter of 2010. The indexes for the Incheon and Jeju regions were up by a smaller margin compared to other regions due to stagnant home prices. The indexes for the Gyeonggi and Seoul regions remained at the same levels as in the previous quarter. 

By home size, the K-HAI index for large-size homes of more than 135m2 went down, while the index for homes sized 135m2 or less went up. 

Following the changes in the time-series data of past household income, which resulted from a change in the statistics of households′ total income and expenditure of Statistics Korea in February 2011, the time-series data of the K-HAI index was recomputed (March 2004-September 2010) by applying the changed household income computation method.