Less burden for urban workers purchasing homes

- A drop in interest rates at the end of Q1 2014 and other factors helped reduce the burden of housing purchase, HF explains
- Lower interest rates and growing household income make it easier for urban workers to buy homes
 
Urban workers now have a reduced burden for housing purchases.

Korea Housing Finance Corporation (HF) announced on the 18th that the Korea Housing Affordability Index* (K-HAI) as of the end of Q1 2014 stood at 51.5 on national average, down by 2.3 points from the end of Q4 2013.
* The housing affordability index measures the burden of repayment facing median-income households of urban workers who make standard loans to buy median-priced housing. With 100 as the basis, a higher number means a greater burden of housing purchase for median-income households.

The dwindling K-HAI figures are attributable to a drop in mortgage loan interest rates (from 3.74% to 3.69%) and an increase in household income (from 4,207,000 Korean won to 4,376,000 won), while median apartment prices remain the same (250 million Korean won) as at the end of the previous quarter.

1) Housing price: Median of KAB housing (apartment) prices
   2) Loan interest: The Bank of Korea’s mortgage loan interest based on the amount of new loans at deposit banks
   3) Household income: Median household income calculated using data on the income of urban worker households with two or more members (from the “Households Trend Survey” by KOSTAT) and the regional vs. national translation ratios of monthly wages for full-time workers at businesses with five or more employees (from the “Monthly Labor Statistical Survey” from the Ministry of Labor)

Reduced burden of housing purchase in most of the areas nationwide compared to the previous quarter

K-HAI figures by area suggest that the burden of housing purchase was reduced in most of the areas across the nation compared to the end of the previous quarter. Daegu and Ulsan saw their burden of housing purchase grow due to rising apartment prices, while the burden was lessened elsewhere thanks to an increase in monthly average household income and other factors.

K-HAI drops in the Seoul Metropolitan Area across all apartment sizes

depth analysis by area and apartment size sh135m2; and 4.8% for those greater than 135m2. Especially in Seoul and Gyeonggi Province, the index showed a sharper drop than the national average across all apartment sizes.