The housing supply rate in Seoul has dropped continuously over the past three years to 93.7% in 2022, the lowest in 13 years. The housing supply rate is the number of housing units divided by the number of households, and a 100% rate indicates an equal number of houses and households. The general expectation was that lower birth rates and a declining population would reduce housing demand and increase supply rates. However, despite the population decline, the explosive rise in single-person households has outpaced housing growth, resulting in a decline in the housing supply rate. To address the housing shortage, various types of housing, such as small single-person houses, are needed in addition to apartments typically designed for households with three or more people.
According to Statistics Korea on Jan. 23, Seoul’s housing supply rate as of the end of 2022 was 93.7%, down 0.5 percentage points from 94.2% the previous year, falling for three consecutive years since 2019 (96%) and the lowest in 13 years since 2009 (93.1%).
The housing supply rate in Seoul had been on an upward trend since 2009 due to an influx of redeveloped and reconstructed apartments but began to decline after reaching a peak of 96.3% in 2017. The decline in the housing supply rate was partly due to a slow pace of housing supply, affected by the previous government’s real estate policies and a weakening real estate market since late 2022. However, the main factor is the significant rise in single-person households.
Seoul’s population has decreased by 5.9% (590,000 people) from 10.02 million in 2015 to 9.43 million in 2022. Despite the population decline, the number of households rose by 8.5% or 320,000 households, from 3.78 million to 4.1 million during the same period. The increase is attributed mainly to a 39.3% (440,000 units) surge in single-person households from 1.12 million to 1.56 million. Meanwhile, the number of houses grew only by 1.6%, from 3.78 million to 3.84 million, challenging the real estate market’s long-term downtrend theory that a decreasing population would lead to a surplus of houses and lower prices. “The housing demand is driven by the number of households, not the population,” said Professor Lee Chang-moo of Hanyang University. “The number of households will likely keep growing due to the rise in one to two-person households.”
Experts point out that to stabilize the housing market, it is necessary to go beyond achieving a 100% housing supply rate and secure a surplus of housing stock. It is essential in urban areas, where many existing homes are demolished due to reconstruction and redevelopment. Additionally, the perceived housing supply rate is even lower when considering lower-quality housing, such as semi-basement apartments, included in the housing count.
