Home purchases are becoming increasingly unaffordable and prices and loan interest rates have reached their highest level in four year and three months, the Korea Housing-Finance Corp. announced Monday.
In the first quarter of this year, the Korea-Housing Affordability Index rose to 59.3, a 0.4 percentage point increase compared to the previous quarter, according to data. The figure marks the highest average rate in more than four years since reaching 59.9 in the fourth quarter of 2012.
The K-HAI represents the loan repayment burden for the homebuyers’ population listed in the median income bracket who have purchased average-priced housing. The index is calculated based on the percentage of one’s income that is allocated to paying off a housing loan. The higher the number, the greater the financial burden.
In 2012, the country’s K-HAI hit 62.3 in the first quarter, followed by 65.3 in the second quarter and eventually dipped slightly to 59.4.
Korea Housing-Finance Corp.’s data also showed that the capital city of Seoul had the highest K-HAI of 103.6, up 1.2 percentage points compared to the previous quarter. The index marks the highest since the last quarter of 2012 when it reached 104.3.
Jeju Island’s K-HAI index rose 6.2 percentage points since the last quarter, reaching 85.1, while Busan and Daegu both surpassed the 70th percentile index at 70.8 and 72, respectively.
As the country’s K-HAI index continues to increase, the Korea-housing opportunity index is also seeing a slump in the number of affordable housing. The index represents the number of affordable homes available for average income buyers. The higher the K-HOI rating, the easier it is to purchase a home.
The K-HOI has been on a steady decline in recent years, falling to 60.4 last year compared to 64.8 in 2012, 63.3 in 2013, 62.5 in 2014 and 61.7 in 2015.
Meanwhile, the country’s average housing prices rose 0.21 percent on-month in June compared to the 0.14 percent jump in May, according to the Korea Appraisal Board. Seoul’s housing price rise accounted for 0.66 percent in June, while the government complex hub of Sejong saw the nation’s largest price spike last month at 1.67 percent.
By Julie Jackson (email@example.com