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Land, property in S. Korea account for 75.6 pct of per-household net assets

Xinhua, June 14, 2016 Adjust font size:

Non-financial assets, such as land and property, accounted for over two-thirds of the total per-household net assets in South Korea, raising risks over negative impacts from the possible housing market slowdown, a government report showed on Tuesday.

Net assets of households and non-profit organizations averaged 361.52 million won (405,000 U.S. dollars based on purchasing power parity) per household as of end-2015, according to a joint press release by the Bank of Korea (BOK) and Statistics Korea.

Non-financial assets, including land, buildings and intellectual properties, took up 75.6 percent of the total per-household assets as of end-2015.

It was down 0.7 percentage points from a year ago, but was much higher than 34.9 percent in the United States, 44.3 percent in Japan, 55.1 percent in Canada and 57.4 percent in Britain.

The high rate indicated most of South Korean household assets are consisted of land and properties and possible slowdown in the property market could destroy the household economy and its consequent private consumption.

Bank of Korea (BOK) cuts its benchmark interest rate by a quarter percentage point to an all-time low of 1.25 percent last week, the first cut in a year.

The unexpected rate cut could boost the lackluster economy, but it also boosted worries about an increase in the already record-breaking household debts that had been mainly borrowed to purchase home. Some worried about the bubble-forming in the housing market.

The country's total housing valuations reached 3,519.5 trillion won (3 trillion U.S. dollars) as of end-2015, 2.26 times the value of gross domestic product (GDP) in 2015.

The ratio is higher than 1.4 times in the United States, 1.8 in Japan and 2.0 in Canada, while being lower than Italy's 3.7, Australia's 3.5 and France's 3.1 each.

Meanwhile, the country's combined national wealth, including those from households, companies and the government, amounted to 12,359.5 trillion won as of end-2015, up 5.7 percent from a year earlier. It was 7.9 times more than the country's nominal GDP worth 1,558.6 trillion won last year. Endit