HOUSE prices across Asia Pacific have been soaring for years now with many young professionals struggling to get a foot on the property ladder.
Those looking for second homes are also hard pressed to find good value deals that offer a decent amount of space for their money. High-density metropolises like Tokyo and Hong Kong are seeing the rise of micro- or nano-flats as the pressure for space pushes the price of property ever higher.
People are confined to tiny cupboard-like “apartments,” sleeping within touching distance of their microwave cookers. And that’s the ones who can afford property at all.
A recent study from market research company Nielsen found 73 percent of people believe young people hoping to buy property will need the financial assistance of their parents, needing on average US$180,000 from the bank of mum and dad.
Without this support, buying property is almost out of the question, with a quarter of Hong Kongers believing they will never be able to afford a property.
As young people in the region struggle to get a foot on the property ladder, how does real estate affordability compare globally?
Research from Homes.com found Turkey to be the country where buyers got the most home for their money, with locals being able to purchase 742 ft² when earning a median household income of US$17,067.
The study calculated the average cost per square feet of homes in all 36 Organisation for Economic Co-operation and Development (OECD) countries and compared it to the median annual household income in each, assuming a salary multiplier of 3x for affordability.
After Turkey, a close second was the United States, where buyers can get 669 ft2 of home with earnings of US$44,049.
Top 5 affordable countries to buy:
1. Turkey (742 ft² on US$17,067)
2. United States (669 ft² on US$44,049)
3. Mexico (463 ft² on US$13,891)
4. Russia (415 ft² on US$16,657)
5. Slovakia (350 ft² on US$20,265)
Asia Pacific OECD countries didn’t appear anywhere near the top most affordable. In fact, both Japan and South Korea were in the bottom five.
South Korea came dead last with the average cost per square foot coming in at a whopping US$772. On the median national salary of US$21,723, that gets you just 84.4 ft².
Property prices in the capital Seoul have been skyrocketing this year, seeing a steep rise following mayor Park Won-soon’s announcement of development plans.
According to South China Morning Post, the neighbourhoods of Yeouido and Yongsan saw a particularly steep rise after plans were announced to turn the area into amixed residential-commercial island. And Yangcheon-gu and Jungnang-gu where the mayor said light rail train lines will be built are also making a quantum jump.
A 1,000 ft² in Yangcheon-gu’s Mokdong area, for instance, was sold recently at 1.57 billion won (US$1.4 million), jumping from 1.2 billion won earlier this year.
The government is taking measures to curb the inflating property market by increasing taxes and earmarking anti-speculation zones in the capital.
“If the housing market shows signs of overheating or the rise expands to other regions, we will come up with additional measures quickly. We will also consider further supply plans for newlyweds and young people,” a land ministry official said.
Japan was also in the bottom five countries in the OECD for home affordability, with buyers only able to get 157 ft² on the median salary of US$28,641.
Others in the bottom five were Switzerland, Israel, and Luxembourg.
Least affordable countries to buy:
1. South Korea (84.4 ft² on US$21,723)
2. Switzerland (112.9 ft2 on US$36,378)
3. Israel (129.9ft² on US$24,063)
4. Japan (157.5 ft2 on US$28,641)
5. Luxembourg (161.2 ft2 on US$41,317)