Household Incomes Stagnate While Spending and Debt Continue to Rise

Although the total assets of Korean households are increasing, their actual financial capacity appears to be shrinking. While average assets have grown due to rising real estate prices, income growth has stagnated, and both debt and non-consumption expenditures are rising rapidly. Concerns are mounting that, especially among people in their 40s and the self-employed, the growing debt burden could lead to concentrated shocks if interest rates rise again or the economy slows.

According to the '2025 Survey of Household Finances and Living Conditions' released by the Ministry of Data and Statistics on the 4th, the average household assets as of the end of March this year stood at 566.78 million won, up 4.9% from the previous year. The increase was mainly driven by gains in tangible assets such as real estate, while financial assets grew by only 2.3%.
On the surface, household finances appear to have improved. However, as debt has also increased, households are actually feeling more financially strained.
During the same period, average household debt rose by 4.4% to 95.34 million won. For households with debt, the average amount owed jumped 7.6% to 161.81 million won. The pace of debt growth has now surpassed that of asset growth. In the category of financial debt, rental deposits accounted for 10.1%, marking a record high.
Debt is becoming increasingly concentrated among certain groups. Households headed by people in their 40s saw their average debt rise by 8.9% from the previous year—twice the overall average increase of 4.4%. By occupational status, the self-employed had the highest proportion of debt, while debt among temporary and daily workers also rose by 7.2%, highlighting the expansion of debt among vulnerable groups.
Shin Se-don, professor of economics at Sookmyung Women's University, explained, "People in their 40s face high essential expenses such as housing and children's education, while the self-employed are more sensitive to changes in interest rates and the economy due to income volatility." He added, "Wealthier groups may borrow to invest in assets like real estate or stocks, but when the self-employed or day laborers take on more debt, it signals underlying economic weakness."

While debt is rising rapidly, income growth is slowing. Last year, average household income increased by only 3.4% to 74.27 million won, about half the growth rate seen in 2023 (6.3%). Non-consumption expenditures rose 5.7% to 13.96 million won. As unavoidable expenses such as taxes, interest payments, and pension or insurance premiums increase, households have even less discretionary spending power.
Disparities by social class and region have also widened. As of the end of March 2025, the Gini coefficient for net assets reached a record high of 0.625. The closer the Gini coefficient is to zero, the more equal the distribution; the closer to one, the more severe the inequality. This increase indicates a worsening asset gap.
Additionally, 57% of all households had net assets of less than 300 million won, while 11.8% of households owned assets worth over 1 billion won. In metropolitan areas such as Seoul, Sejong Special Self-Governing City, and Gyeonggi Province, assets, income, debt, and net assets all exceeded the national average, underscoring a deepening regional imbalance.
Experts warn that the current situation should not be mistaken for genuine wealth, as the rise in real estate prices may create a false sense of affluence. They emphasize the need to consider both the slowdown in income growth and the increase in expenditures alongside the expansion of asset values.
Jeong Seeun, professor of economics at Chungnam National University (CNU), noted, "For single-home owners, even if property values rise, the tangible increase in assets is limited." He added, "Even if assets have increased, it is important to also examine how much debt and spending have grown."
As the asset gap widens, calls are growing for more sophisticated policy responses.
Professor Shin stressed, "We must pay attention to the widening asset gap and the increasingly unequal distribution structure," adding, "Policies should shift from focusing on averages to providing tailored support for vulnerable groups."

hippo@fnnews.com Kim Chan-mi Reporter