SEOUL, August 03 (AJP) -Luxury apartment prices in Seoul are rising faster than almost anywhere else in the world, deepening South Korea's wealth inequality as homeownership increasingly determines who accumulates assets, a legislative research institute said Monday.
A recent report by the National Assembly Futures Institute argues that South Korea's inequality is becoming less about income and increasingly about ownership of residential property, particularly prime homes in Seoul, where years of outsized price gains have concentrated wealth among existing homeowners while making it increasingly difficult for younger generations to enter the market.
According to the report, citing Knight Frank's Prime Global Cities Index, Seoul's prime residential property prices climbed 25.2 percent in the third quarter of last year from a year earlier, the second-highest increase among 46 major cities after Tokyo.
Over the past five years, prices in Seoul's top 5 percent residential market have jumped 80.9 percent, ranking third globally.
The researchers said the figures reveal a concentration of gains in Seoul's most expensive neighborhoods that conventional nationwide housing indices fail to capture, masking an increasingly polarized housing market.
That divergence has become increasingly visible across the country.
The median apartment price in Seoul stood at 4.29 times that of non-capital regions in 2025, nearly double the 2.22-times gap recorded in 2014 despite some moderation from the 2021 peak, reflecting how housing wealth has become increasingly concentrated in the capital.
The report argues that Korea's growing inequality is now driven more by assets than income.
While the country's disposable-income Gini coefficient improved to 0.325 in 2024 from 0.387 in 2011, indicating a more even distribution of earnings, the net-wealth Gini coefficient climbed to a record 0.625 in 2025 after reversing course in 2018. The report attributes the divergence largely to rising property values in a country where about 70 percent of household wealth is tied to real estate, well above the OECD average of roughly 50 percent.
Rather than widening disparities among homeowners alone, the institute says the more decisive fault line is between households that own homes and those that do not.
Homeownership stood at just 6.8 percent among households in the bottom wealth quintile, compared with 44.2 percent in the second quintile and 72.5 percent in the middle quintile. Even among homeowners, wealth became more concentrated, with the value gap between the richest and poorest 10 percent of housing assets widening from 40.5 times in 2023 to 44.7 times in 2024.
The report also highlights a rapidly widening generational divide.
Housing accounted for only 11.9 percent of total assets held by households headed by people aged 34 or younger in 2024, down from 22.9 percent in 2016. By comparison, housing continued to represent about 57 percent of assets for households aged 50 to 64.
Young households held average housing assets worth about 48 million won ($34,600), only 14 percent of the 348 million won owned by households aged 50 to 64. The institute estimates differences in housing assets explain nearly 90 percent of the wealth gap between the two generations.
The report also challenges the popular narrative that young Koreans entered the housing market primarily through excessive borrowing.
Citing earlier research, it found that only 3.8 percent to 6.9 percent of homebuyers in their 20s and 30s purchasing owner-occupied homes worth more than 300 million won in Seoul between 2020 and 2022 had debt-service ratios above 40 percent. Instead, successful purchases relied largely on accumulated savings or wealth transferred from parents, underscoring the growing role of family assets in determining access to homeownership.
The institute said Korea's property tax system has also failed to play a stronger redistributive role despite appearing highly progressive on paper.
Although the country employs a dual property tax structure combining local property taxes and a comprehensive real estate holding tax, its effective property tax rate averages just 0.147 percent of asset values, about one-third of Japan's level, while the effective rate on residential housing is only 0.122 percent, roughly one-seventh that of owner-occupied homes in the United States.
The report attributes the gap to generous tax credits, temporary tax relief, preferential treatment for some homeowners and property assessments that remain below market values.
The institute concluded that property tax reform should focus on addressing structural asset inequality rather than short-term housing market cycles. It recommended gradually phasing out temporary tax breaks, simplifying exemptions and strengthening the role of property taxation as part of a broader strategy to narrow wealth disparities while maintaining policy stability.
Copyright ⓒ Aju Press All rights reserved.