Property divide leaves more employed Koreans in their 30s living with parents

Soaring home prices are widening the wealth gap between older and younger Koreans, leaving a growing number of employed people in their 30s unable to afford living on their own despite having stable jobs.

"Nearly half of my salary would disappear just to pay for housing," said Lee, aged 33, an office worker who has worked for eight years but still lives in their parents’ house. 

Places in decent condition that Lee found typically required a deposit of around 10 million won ($6,760) and monthly rent of between 1 million won and 1.5 million won.

"I don't plan to leave my parents' home unless there is a reason to do so," Lee added. 

The average net assets of households headed by people in their 20s and 30s fell 3.4 percent, or 7.8 million won, from 227.3 million won in 2020 to 219.5 million won last year according to a JoongAng Ilbo analysis of microdata from the Ministry of Data and Statistics' survey of household finances and living conditions. But the average net assets of households headed by people in their 50s and 60s rose 38.5 percent, or 159.7 million won, over the same period from 414.5 million won to 574.2 million won. 

The wealth gap between the two generations widened from 187.2 million won to 354.7 million won. Older households held 2.6 times as much net wealth as younger households last year, compared to 1.8 times in 2020.

Amid a widening gap, more people are living with their parents. The number of households in which unmarried people in their 30s live with parents in their 50s and 60s also increased 15.2 percent, or 170,000, during the period from 1.12 million in 2020 to 1.29 million last year. 

Real estate accounted for most of the widening gap.

The difference in average real estate assets between the two groups increased from 174.5 million won in 2020 to 322.2 million won last year, accounting for 88.2 percent of the overall increase in the net asset gap.

The findings suggest that rising home prices primarily benefited older generations that already owned property, while younger people who had yet to enter the housing market were largely left behind. The homeownership rate among households headed by people in their 20s and 30s fell from 39.1 percent in 2020 to 27.7 percent last year.

The so-called boomerang kids — adults living with their parents for financial reasons — are no longer limited to unemployed young people. They increasingly include workers with stable incomes who still cannot afford to live independently.

Among unmarried people in their 30s living with parents in their 50s and 60s, the employment rate increased from 77.5 percent to 78.1 percent, while the proportion of regular employees rose from 56.2 percent to 58.6 percent.

There are also concerns that tighter lending regulations could further limit housing opportunities for younger population.

The borrowing limit for the Didimdol loan, a government-backed low-interest mortgage program for first-time homebuyers, was lowered from 300 million won to 240 million won under housing measures announced on June 27 last year. The Beotimmok loan, a government-backed jeonse (lump sum deposit) loan for people between the ages of 19 and 34, was reduced from 200 million won to 150 million won.

The tighter lending rules are intended to curb household debt and rising home prices. Critics warn, however, that higher borrowing barriers could allow only young people with substantial savings or financial support from their parents to enter the housing market, widening wealth disparities even within the younger generation.

"The lending threshold has become far too high," said Park, a 34-year-old office worker at a midsize company. "For young people trying to buy a home using only their salaries without financial help from their parents, it feels as if they are effectively being told not to buy one."

The Bank of Korea said in a report released last month that the concentration of real estate wealth among older generations was entrenching generational wealth polarization.

"Constraints on the possibility of moving up the social ladder through individual effort could weaken motivation to work and social trust, thereby increasing social costs," the central bank said.

Yang Jun-sok, professor of economics at the Catholic University of Korea, warned that the trend could also have broader demographic implications and called for measures to improve housing affordability.

"The longer young adults continue living with their parents, the more family formation may be delayed, which could further lower the birthrate," Yang said.

"Lending restrictions may curb housing price increases in the short term, but they could ultimately limit homeownership opportunities to young people who can receive financial support from their parents," Yang added. "Housing supply should be increased in the greater Seoul area, where demand is concentrated, to stabilize home prices."

BY NAM SOO-HYOUN [[email protected]]