The cost of the median apartment in Seoul has finally dropped below 1 billion won after a few months of constant decline ever since its peak last July - 1.9 billion.

Although a decrease in housing prices may seem unpreferable, it is a moment that many South Koreans have wanted.

This fall in apartment prices is because the overall housing price in Seoul has skyrocketed throughout the last decade and only started to ‘stabilize’ recently - but why?

A myriad of reasons may exist for the phenomenon. 

Still, experts mainly point to two things: A supply-demand mismatch and constant regulation failure. 

Although the drop may affect diverse people in diverse ways, leaving behind significant and complicated social impacts, one-half of its cause is quite simple; The city doesn’t have enough houses for all of its people. 

As of 2022, Seoul had approximately 3.77 million houses - more than 0.2 million short of the total number of households that hovered above 3.98 million. 

Compared to other regions of South Korea, the small gap between housing demand and supply in Seoul has not been fully resolved for multiple years; In fact, it has been getting noticeably wider every year since 2017. 

Many believe the actual problem is even worse, as the statistic does not consider people who own multiple homes or foreigners. 

In contrast with such data, Seoul’s population has been on a constant decline for several years, with the number dropping below 10 million for the first time since the 1980s.

Given how new residences - primarily apartments - are constantly being built, it seems odd that the housing supply is not catching up with the demand.

Experts point to the increase in single-person households as the reason behind the irony; Unlike traditional families, more people are starting to live alone, meaning that more houses are required.

For instance, one traditional household consisting of three or four people required one house in the past, but all of them need their own currently. 

The mismatch causes a relatively straightforward problem: House costs rise as more people  compete against each other, naturally having to offer higher prices to win. 

Additionally, many accuse past administrations of constant policy failures, which accelerated the fluctuation to an uncontrollable degree. 

Former president Moon Jae-in is accused of providing the tipping point for this real estate crisis, as the average housing price in Korea has increased by 760 million won throughout the five years of his administration. 

Moon’s policies mainly centered around the principle of stronger regulations, especially a significant increase in acquisition and capital gains tax, and repressing reconstruction policies. 

Such changes led to a major dilemma for house owners, as both keeping and selling homes were followed by massive tax obligations. 

Many believe that Moon’s real estates were also out-of-date, especially in terms of additional tax obligations for the rich. 

Past standards ruled that owners of houses that cost 900 million won or higher should pay additional comprehensive real estate tax, but Moon failed to update the number despite overall inflation in house prices since the law’s initiation; This led to an irony in which a rich-only taxation mechanism imposed obligations upon the top 25%, not 1%. 

Park Geun-hye, Moon’s predecessor, has also faced criticism regarding her real estate policies, most notably an increase in housing supply and lower taxes - seemingly the opposite of Moon’s policies, which ironically ended up having similar consequences. 

Her policies made the rich who owned multiple homes buy even more without worrying about taxes, leading to many people, especially newcomers to society, being left without their own. 

President Yoon made promises to resolve the real estate crisis and provide affordable homes for every Korean citizen - and there are some visible outcomes of such policies, most notably the slow yet steady decline in Seoul’s housing prices. 

However, the situation might not be getting better just yet; There was only a notable decrease in the median housing price, meaning that relatively smaller and cheaper apartments are getting even cheaper - which would most likely damage younger generations who own such homes.

Rapid and widespread gentrification is already happening in Seoul’s most developed and prosperous towns - a rising social problem.

The policies Yoon’s administration will implement during the next four years remain uncertain; thus, the tangible consequences of the real estate crises are not definite yet.

Alvin Song
Year 10
North London Collegiate School