Seoul and Tokyo, Ten Years Apart: What the PIR Reveals About Housing Affordability
Considered Analysis
Seoul and Tokyo, Ten Years Apart: What the PIR Reveals About Housing Affordability
A number crossed our desk recently that seemed worth sitting with rather than passing over.
Comparing Numbeo's 2016 annual index with its 2026 mid-year edition, Seoul's price-to-income ratio (PIR) — the multiple of average household income required to purchase an apartment — moved from 16.6 to approximately 30.0. Tokyo, over the same span, moved in the opposite direction: from 26.0 down to roughly 16.0. Seoul has become one of the world's least affordable major housing markets by this measure, with the gap between the two cities now nearly twofold.
Methodology note: figures compare Numbeo's 2016 annual index against its 2026 mid-year index — two separate periodic editions rather than a single continuous series, so the underlying data collection window differs slightly between them. PIR is calculated as (90㎡ × average of city-centre and suburban price per ㎡) ÷ (average post-tax monthly salary × 1.5 × 12). Numbeo's data is crowd-sourced and updated continuously; the live "Current" index places Seoul closer to 27–28, though the direction and scale of the Seoul–Tokyo divergence hold across both editions.
A market moving against the grain
Most global cities in this comparison have seen PIR flatten or decline over the past decade — Tokyo, Vienna, Stockholm, San Francisco among them. Seoul is the clear outlier, and not by a small margin. The causes are familiar to anyone who has followed the market closely: constrained supply in central districts, a decade of shifting mortgage regulation, and a persistent concentration of population, capital, and opportunity into a small number of neighborhoods.
The consequence of a rising PIR is not simply that homes are expensive. It is that the income required to enter the market has decoupled from what new households actually earn. Fewer buyers can participate through conventional financing. Transaction volume in the broader market tends to thin. And demand that cannot buy does not disappear — it moves into the rental market instead.
Where the PIR framework breaks down
For readers unfamiliar with Seoul, one structural detail matters more than any single ratio: a large share of transactions in the city's prime residential districts — Hannam-dong, UN Village, Seongsu, Yongsan — are not mortgage-driven at all. Cash purchases, family transfers, and jeonse-based capital (a Korea-specific lease deposit structure, typically 60–70% of a property's value, held interest-free by the landlord for the lease term in place of monthly rent) all move independently of household income and borrowing capacity. A PIR calculated against the average household income says relatively little about how these transactions actually occur.
A weakening broader market and a more resilient prime segment are not necessarily contradictory. They can be, and in Seoul's case likely are, the same structural shift viewed from two different altitudes. As the broader market narrows to a smaller pool of qualified buyers, the properties that pool actually wants — well-located, well-built, defensible long-term — tend to hold their relative position rather than lose it.
What this likely means going forward
The more immediate effect, in our view, sits in the rental market rather than the sales market. As entry into ownership becomes harder for households operating on conventional income and financing, more demand shifts toward jeonse and monthly rent (wolse). Seoul's wolse market has historically been comparatively affordable next to peer global cities; a market reshaped around fewer, better-capitalized buyers is a market where that gap is unlikely to persist.
For the prime segment specifically, the effect is closer to scarcity than distress. A narrower buyer pool with more capital, competing for a genuinely limited stock of well-located inventory, is not typically a market that softens — it is one that consolidates around fewer, more considered transactions.
In a market where the base is becoming thinner while selected assets remain resilient, the distinction between nominal prestige and genuine long-term quality matters more than it did a decade ago. Location alone is no longer enough. Liquidity, holding cost, product quality, legal structure and eventual exit demand all require closer scrutiny.
To be honest, I find this deeply troubling. A housing market increasingly detached from earned income is not simply a pricing issue; it affects social mobility and people's confidence in the future. Yet Korea has repeatedly confronted difficult structural problems through public debate, disagreement and persistent collective effort. I believe it will eventually find a way forward here as well.
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