Population and real estate relationships

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1. demographics and real estate market

1.1 Demographic Theory

South Korea’s declining fertility rate is one of the major issues that could have a serious impact on the country’s economy. The impact of population on the economy can be measured through production functions, consumption functions, and input-output tables. From these figures, you can calculate the amount of consumption expenditure, production induced, value added, and employment created by the demographic change.

In particular, the impact of demographic change on real estate prices, especially residential real estate, is well documented. We call this the “demographic theory,” which states that real estate prices will rise as a country’s wealth class (35-55 years old, with the core wealth class being 45-49 years old) gets thicker in the future, and fall as it gets thinner.

1.2 Limitations of the theory

However, this demographic theory doesn’t always provide accurate predictions. For example, predictions that the U.S. economy and real estate market would fall into a prolonged recession starting in 2010, when the country’s baby boomers retired, were not correct. From there, the U.S. economy and stock market began to recover, leading to the longest boom and bull market since World War II.

Similarly, in South Korea, demographic theory does not always provide accurate results when it comes to predicting apartment prices. This theory mainly applies to times when finance reflects the real world, and in times when finance drives the real world, real estate price forecasts can often be wrong.

2. the complex relationship between population and real estate

2.1 Aging population and real estate market

Aging and shrinking populations can put long-term downward pressure on home prices. However, rather than simply linking this to a “real estate crash,” it may be more appropriate to understand it as a factor that delays or weakens the rebound in the housing market cycle.

The relationship between an aging population and the real estate market

2.2 Household growth and housing demand

Some argue that as the number of households grows, so will the demand for housing. However, this household growth is largely driven by an increase in single-person households, whose housing needs are limited to smaller dwellings such as offices and studios rather than medium to large apartments. Therefore, an increase in households is unlikely to translate into an increase in demand for new housing.

3. The Crisis and Prospects for Rebuilding Systems

3.1 Understanding the Reconstruction System

The system of apartment reconstruction in our country could become a serious crisis in the future. Reconstruction means tearing down a 100-unit apartment building and building a 140-unit apartment building in its place. In this way, the apartment rebuilding system can be maintained as long as new tenants keep coming in.

3.2 Population decline and the crisis of the reconstruction system

However, in an era of declining population, it can be difficult to find new residents. When rebuilding becomes difficult, deteriorating apartments can turn into high-rise slums, and this crisis can begin in depopulated rural cities and gradually spread to larger cities and metropolitan areas.

3.3 The need to take action

Now that the real estate bubble has burst, it’s time to start thinking about how we can make housing work for the shrinking society that’s coming. In an era of shrinkage, the supply caution that drove the growth era doesn’t work, so new measures are needed.


South Korea’s real estate market can’t ignore the impact of demographic shifts. As a result, it’s important to understand how changes like aging and shrinking populations and growing households affect the housing market. However, rather than simply linking these changes to a “real estate crash theory,” it’s more important to recognize that a complex combination of factors determine the real estate market. In addition, it is necessary to recognize the problems of the reconstruction system and take appropriate measures to prepare for the future era of population decline.

“The real estate market in South Korea cannot ignore the impact of demographic shifts, so it is important to understand how changes such as aging and shrinking populations and growing households affect the housing market.”

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