Household Financial Well-Being Survey Reveals Alarming Statistics
The recent release of the 2023 Household Financial Well-Being Survey has shed light on the concerning state of household finances in South Korea. Conducted by the Bank of Korea, the National Statistical Office, and the Financial Supervisory Service, the survey paints a stark picture of the challenges faced by the average household.
Key Findings:
- Residential housing assets have seen a significant decline of 10%, with the average household assets dropping to KRW 527.27 million, a decrease of 3.7% from the previous year.
- The average debt per household has reached an all-time high of KRW 91.86 million, reflecting a 0.2% increase from the previous year.
- Income inequality has shown signs of improvement, with the Gini coefficient reaching its lowest level since statistics were compiled.
According to the survey, the deteriorating real estate market has contributed to the decline in assets, marking the first time in 11 years that combined financial and real assets have decreased. The rapid real estate craze in previous years resulted in a significant increase in assets, but the recent downturn has reversed this trend.
Despite an increase in average household income, the burden of debt repayment has become increasingly challenging for many households. A staggering 67.6% of debt-holding households reported that repaying the principal and interest has become burdensome, with 5.5% expressing concerns about the possibility of repaying household debt.
These statistics serve as a sobering reminder of the financial pressures faced by households in South Korea. As the country seeks to recover from the economic impact of the pandemic, addressing these challenges will be crucial in ensuring sustainable economic growth and stability.
Reporter: Kim So-ra
The poor livelihood of the people has been proved by statistics
Residential housing assets down 10%, average assets KRW 527.27 million, 3.7% ↓ Top debt KRW 91.86 million amid high interest rates
▲ Park Eun-young, head of the well-being statistics department at Statistics Korea, announces the results of the 2023 household financial well-being survey at the Sejong Government Center on the 7th. Sejong News 1 Average household assets have shrunk for the first time in 11 years as the high interest rate trend that started last year has driven down real estate prices. As the average debt per household increases to an all-time high, statistics have confirmed the ‘counterattack of high interest rates’ where the interest burden of households also increases to an all-time high.
The Bank of Korea, the National Statistical Office, and the Financial Supervisory Service released the ‘Results of the 2023 Household Financial Well-Being Survey’ on the 7th. According to this, the average assets per domestic household at the end of March this year was 527.27 million won, a decrease of 3.7% from the previous year (547.72 million won). This is the first time in 11 years since statistics began in 2012 that the combined assets of financial and real assets have fallen behind compared to the previous year. This survey was carried out on approximately 20,000 households across the country between March 31 and April 17. ▲ Until last year, the average assets per household continued to increase. Due to the recent rapid real estate craze, it rose 12.8%, the most since statistics were compiled in 2021, following last year’s 9.0% increase. The decrease in assets per household this year is the result of a 5.9% decrease in real assets (KRW 401.4 million), including a 10% decrease in housing assets due to the deteriorating real estate market. Park Eun-young, head of the welfare statistics department at Statistics Korea, said, “The underlying factors resulting from the high asset growth rate in 2021 and 2022 need to be considered.” Financial assets, including savings (125.87 million won), increased by 3.8%.
Debt increased even in a high interest rate environment. At the end of March, the average debt per household was won at 91.86 million, an increase of 0.2% compared to last year, reaching the highest level since statistics were collected. Among these, financial liabilities (KRW 66.94 million) decreased by 1.6% and rental deposits (KRW 24.92 million) increased by 5.3%. However, the growth rate was the lowest ever since statistics were first compiled. Average net assets per household, which subtracts liabilities from assets, was 435.4 million won, a decrease of 4.5% from the previous year and the first decrease in 10 years since 2013. The interest burden due to high interest rates was highest ever. From last year, there was an 18.3% increase in interest costs among expenditure not related to household consumption (taxes, public pensions, etc.) compared to the previous year, recording the largest increase since statistics were compiled .
They found that average household income is increasing and indicators of income inequality have improved. Last year, the average income per household was 67.62 million won, with earned income (6.4%), business income (4.0%), property income (2.5%), and previous transfer income (2.7%) all increasing. Non-consumption expenditure (8.1%) increased more than income, but disposable income (54.82 million won) increased by 3.7% compared to the previous year. The Gini coefficient (based on equal disposable income), which shows the degree of income inequality, was 0.324 last year, down 0.005 points from the previous year, showing the lowest level since statistics were compiled.
However, as the burden of principal and interest repayments on debt-holding households increases, alarm bells are mounting as domestic demand recovers. In this survey, among households with financial debt, 67.6% of households responded that ‘repaying the principal and interest is burdensome’, an increase of 3.2 percentage points compared to the previous year, and 5.5% of households responded that ‘repaying the household debt will be impossible’ It increased by 0.8% points.
Reporter Kim So-ra
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