The debt of young people in 2030 has decreased considerably. This is the result of young people who were looking forward to selling real estate last year as housing price growth slowed and interest burden increased due to high interest rates. The real estate assets of those under the age of 39 have decreased significantly, and as a result, overall assets have also decreased significantly.
Looking at the ‘2024 Household Financial Welfare Survey Results’ jointly conducted and announced by Statistics Korea, the Bank of Korea, and the Financial Supervisory Service on the 14th, the average debt per household as of the end of March was 91.28 million won, a 0.6% decrease from the previous year. This is the first time that the average debt of all households has decreased since statistics were compiled in 2012.
The decrease in debt among young people was notable. Debt under the age of 39 decreased by 5.2% (-5.12 million won) from 99.37 million won in March last year to 94.25 million won this year,recording the largest drop by age.those in their 50s also decreased by 3.7% (-3.98 million won). On the other hand, those over 60 years old increased by 2.0% (+1.22 million won) to 63.28 million won, and those in their 40s also increased by 4.9% (6.17 million won).
The burden of interest repayment has increased due to prolonged high interest rates, and young people are selling their real estate due to the perception that housing prices are at a high level. according to KB Real Estate, apartment sales prices nationwide last year fell 6.72% from a year ago. The interest rate on bank household loans continued to be around 5% last year, and the interest rate on home mortgage loans was also in the low to mid 4% range.
In fact, the average assets per household at the end of March this year were 540.22 million won, an increase of 2.5% (12.95 million won) compared to the previous
However, the average assets of those under the age of 39 decreased by 6.0% (-20.32 million won) from the previous year to 315.83 million won, the only decrease among age groups. In detail, the real assets of people in their 30s shrank by 8.7% (-17.63 million won), of which real estate assets were calculated to be 161.35 million won, a 10.4% decrease (-18.66 million won) from the previous year.
It appears that some of the money from real estate sales by people in their 30s whent into financial assets such as savings and stocks. The average regular, savings, and deposit savings of those under the age of 39 increased by 1.8 million won to 33.99 million won. Stocks,bonds,and funds increased by 300,000 won,reaching an average of 12.82 million won per household.
An official from the National Statistical Office saeid, “As the real estate ownership of householders in their 30s has decreased, the debt of that age group has decreased,” adding, “It can be interpreted that the trend of taking out large amounts of debt to buy and sell real estate has eased recently.”
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What are the main factors contributing too the soaring subscription competition rates for apartments in Seoul?
Interview Between Time.news Editor and Real Estate Expert
Editor: Welcome to Time.news! Today,we have the privilege of speaking with Dr. Min-jae Kim, a leading expert in real estate economics.Dr. Kim, thank you for joining us.
Dr. Kim: thank you for having me. It’s great to be here, especially to discuss such an critically important and timely topic.
Editor: Absolutely. Recently,we’ve seen a engaging trend in Seoul’s real estate market. The average subscription competition rate for apartments has soared to 154.5 to 1 this year. What do you think is driving this “lotto subscription” craze?
Dr. Kim: This is indeed an unprecedented situation. The sharp increase in competition for apartment subscriptions is largely due to the anticipated decrease in supply. As you mentioned, many expect the availability of apartments to drop substantially next year, especially in high-demand areas like the gangnam district. This creates a fear of missing out among potential buyers, prompting them to participate in subscriptions at unprecedented rates.
Editor: It really symbolizes the desperation and urgency among homebuyers. With such high competition rates, how do you think this affects the long-term stability of the real estate market in Seoul?
Dr. kim: High subscription competition can lead to inflated prices,which may not be sustainable in the long run. If buyers are paying significantly more in the hopes of securing a property, they may find themselves in financial distress if property values correct. The current dynamics are precarious, particularly as we also see rising interest rates, which could further exacerbate the situation.
Editor: Speaking of interest rates, the data reflects that young peopel are experiencing a notable decrease in debt as they offload real estate due to these high interest burdens. What implications does this have for the younger generation’s financial health?
Dr. Kim: This decrease in debt among those under 39 is certainly a double-edged sword. While it may signal a relief for young buyers facing high interest rates—in their current context of economic uncertainty—it also indicates a significant decline in their real estate assets.As more young individuals are selling properties they perceive to be overpriced, their overall financial stability may be affected negatively, particularly if they fail to effectively manage their remaining assets.
Editor: That’s an critically important point. After all, the pressure to sell in a hot market can also lead to long-term asset diminishment. Speaking of assets, how has the financial landscape shifted for households in general, based on the recent Household Financial Welfare Survey?
Dr. Kim: The survey indicates a 0.6% decrease in average household debt, the first decline sence 2012. This is encouraging,as it shows a healthier trend at the macroeconomic level. Tho, the decrease in assets for younger demographics, as you highlighted, shows that not all age groups are benefiting equally. The fact that the average assets per household increased contrasted with significant losses for those under 39, raises concerns about equity in economic recovery.
Editor: That disparity is indeed alarming. With many young individuals now facing declining net worth, what solutions would you propose?
Dr. Kim: It’s crucial to create more affordable housing options and to encourage policies that support first-time buyers. Additionally,education around financial literacy is vital,allowing younger generations to navigate these turbulent waters effectively. Government incentives for affordable housing development could help align supply with demand, stabilizing the market.
Editor: Great insights, Dr. Kim. As the landscape continues to evolve, what are your predictions for the coming year in Seoul’s real estate market?
Dr. Kim: I anticipate a rocky year ahead. With already high competition rates and the looming prospect of decreasing supply, we might see further volatility in pricing. However, if interest rates stabilize and more apartments enter the market, we could see a healthier balance return by late next year. It’s essential for all stakeholders to remain vigilant and adaptable.
editor: Thank you so much for sharing your wisdom today, Dr. Kim. Your analysis offers a clearer picture of the complex dynamics shaping Seoul’s real estate market.
Dr. Kim: Thank you for the prospect! It’s always a pleasure to discuss these crucial issues.
Editor: We appreciate your time, and we look forward to following this story closely.