South Korea's land minister, Park Sang-woo, recently acknowledged the challenges posed by the country's aging population and slowing economy, which have dampened real estate demand. To address this, the government aims to make housing more affordable by introducing measures such as cheap mortgages for newlyweds and developing a high-speed underground rail network to connect cheaper housing markets on the outskirts of Seoul with employment hubs. Additionally, Park emphasized the importance of assisting young people in diversifying their investments beyond real estate and supported financial authorities efforts to restructure unprofitable property projects. These initiatives seek to mitigate the impact of high housing costs and promote economic stability.
South Korea's land minister, Park Sang-woo, stated in an interview with Reuters that due to the country's aging population and slower economic growth of 2% to 3% annually, it's unlikely to witness the significant home price increases seen in the past. He pledged to enhance access to housing by promoting public rental accommodation.
In previous years, the economy experienced growth rates of 7% to 10% annually, and families typically had two or three children. However, it's unlikely that this generation will witness a recurrence of such circumstances. South Korea's median house prices reached their highest point in June 2021, having surged by 45% over five years, as per data from the Korea Real Estate Board. Subsequently, they declined by 19% following a series of interest rate adjustments by the central bank.
Nevertheless, South Koreans point to exorbitant housing expenses as the primary cause of declining birth rates and marriage rates. In 2023, the country's already record-low fertility rate reached a new low. The ministry's annual survey revealed that in 2022, house prices were 6.3 times higher than the average annual household income, showing a slight decrease from 6.7 in 2021. However, in Seoul, the price-to-income ratio increased to 15.2 from 14.1 the previous year.
The government Is taking steps to make housing more affordable. This includes introducing affordable mortgages for newly married couples intending to start a family. Additionally, to address work-life balance issues in the broader Seoul region, where 45% of the population resides, the government intends to establish a high-speed underground rail network connecting less costly housing areas on the outskirts of Seoul with employment opportunities in the city center. Simultaneously, the government aims to expand the availability of long-term public rental properties through the corporate sector by relaxing regulations.
Park also mentioned plans to assist young individuals in diversifying their investments beyond real estate. Acknowledging the subdued demand for real estate, he expressed agreement with financial authorities regarding the need to restructure unprofitable property projects.
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