Poorer Households Face Higher Housing Costs Than the Rich

  • By Ahn Joong-hyeon

    August 25, 2020 11:35

    Poorer households had to spend a bigger proportion of their income on housing than middle or high-income households in the second quarter of this year.

    According to Statistics Korea on Monday, the average monthly housing expenditure of households in the lowest income bracket increased 13.8 percent on-year in the second quarter to W91,717, which was more than in other income brackets (US$1=W1,188).

    It is not unusual for housing expenditures to account for a large proportion of monthly spending among poorer people because middle and high-income households either live in their own homes or can earn enough money to pay the rent without batting an eyelid.

    From the third quarter of 2019 until the first quarter of this year, the bottom 20 to 40 percent of the income bracket spent the most on monthly housing expenses. But in the second quarter, monthly rent increased 13.8 percent for households in the bottom of the income bracket and 13.3 percent for households one level above.

    That meant the average monthly housing expenditure in the bottom income bracket was proportionally higher in the next three brackets above them (W91,549-W73,387).

    The trend was due to a rise in rents and a growing number of landlords shifting from jeonse or Korean-style deposit leases to monthly rent as interest rates fell to near-zero.

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