The financial burden of buying homes across the country has increased again in a year. This is due t..

Seoul Housing Purchase Burden Index 165.1
2 Highest in 6 months
Income 42.4% Repayment of principal and interest on mortgage loans

사진 확대 A notice for sale posted at a real estate agency in Gangnam-gu, Seoul. [Yonhap News]

The financial burden of buying homes across the country has increased again in a year. This is due to the rebound in related indices, which has also increased the burden on ordinary people.

According to the Korea Housing Finance Corporation on the 7th, the nationwide housing purchase burden index (K-HAI) in the fourth quarter of last year was 60.9, up 1.3 points from the previous quarter (59.6). It has risen after falling for three consecutive quarters since the fourth quarter of 2024 (63.7).

The housing purchase burden index, which is usually calculated every quarter, shows the degree of principal and interest repayment burden when middle-income households purchase median-priced houses as standard loans.

In addition to 25.7% of the total debt-to-income ratio (DTI), a 20-year equal repayment condition of principal and interest of 47.9% of the mortgage ratio (LTV) was assumed to be the standard loan.

The index of 60.9 means that 60.9% of the appropriate burden per household is paid by mortgage principal and interest. The appropriate burden is 25.7% of income, so the principal and interest of the mortgage is about 16% of income.

The nation’s home purchase burden index stood at 89.3 in the third quarter of 2022, the highest since statistics were compiled in 2004 and then fell for seven consecutive quarters through the second quarter of 2024 (61.1).

After that, it rebounded to 63.7 in the fourth quarter of 2024, but fell down in the first three quarters of last year.

It was 59.6 in the third quarter of last year, below 60 for the first time in about five years since the fourth quarter of 2020 (57.4), but exceeded 60 again in the fourth quarter.

Seoul Regional Index ‘Best’ in 2 years and 6 months

사진 확대 A view of the Gangnam apartment complex from Lotte World Tower in Songpa-gu, Seoul [News1]

In particular, by region, Seoul’s home purchase burden index in the fourth quarter of last year was 165.1, up 9.9 points from the previous quarter (155.2). In other words, 42.4% of the income was spent on repaying the principal and interest of mortgage loans.

The Seoul regional index reached its highest level in two years and six months since the second quarter of 2023 (165.2). The increase from the previous quarter was also the largest in three years since the third quarter of 2022 (+10.6 points).

As of the fourth quarter of last year, the Seoul regional index was the highest among 17 metropolitan and provincial governments nationwide, and the index rose the most. Although all regional indices in the country rose from the previous quarter, no region exceeded 100 other than Seoul, the report showed.

Sejong was the second with 97.3, followed by Gyeonggi (79.4), Jeju (70.5) and Incheon (65.0).

It was followed by Busan (60.2), Daejeon (59.8), Daegu (54.3), Gwangju (50.2), Ulsan (47.5), Gangwon (37.0), Gyeongnam (35.8), Chungbuk (35.0), Chungnam (33.8), Jeonbuk (31.9), and Gyeongbuk (29.1).

An official from the Korea Housing Finance Corporation said, “There was no significant change in housing prices or household income in the fourth quarter of last year,” adding, “The overall index rebounded due to a relatively large rise in bank loan interest rates.”

He added, “The rate of handling new mortgage loans by deposit banks, compiled by the Bank of Korea, rose from 3.96% per annum in the third quarter to 4.23% in the fourth quarter.”