Title : Impact of Population Aging on the Housing Market
Author : Kanghyun Oh(BOK), Sol Kim(BOK), Jaejun Yoon(BOK), Sangki Ahn(BOK), Donghwee Kwon(BOK)
Population aging due to low fertility and prolonged life expectancy is expected to bring a large structural change in the housing market in the mid to long-term in terms of i) occupation type and residential areas, ii) housing type and iii) purpose of possession, and others. In particular, the rate of population aging in Korea is faster than that in other major countries, and it is highly likely that the effects of populations aging on the housing market will appear to be compressive as baby boomers become 65 or above after 2020.
First of all, in the case of housing occupation type and residential area, it is necessary for some elderly households to preserve their income by disposing houses under insufficient provision of future living expenses. This phenomenon is expected to slow down the growth of housing demand, on top of young households decreasing demand for housing and shrinking residential areas. In addition, as the number of elderly household with 1~2 people increases and the need for liquidation of housing assets after retirement grows, demand for small- to mid-sized houses and apartments is likely to increase. Meanwhile, It is highly likely that the leasing market will continue to change due to an increase in incentives to pursue stable cash flows through monthly rental for multi-house owners and young households’ steady demand for leases.
In order to prevent structural changes in house market, due to population aging, from causing supply-demand imbalance of the housing market, it is necessary to stabilize the supply and demand of mid- and long-term housing. At the same time, supplying customized housing for the aged, expanding public rental housing for people with housing disadvantages such as young, low income, and impoverished elderly and promoting inventory management measures such as utilization of vacant houses should be implemented. Especially, if the housing disposal of baby boomers is concentrated in the short term, it can act as a pressure to lower house price. To this end, measures should be taken to mitigate the pressure on the sale of housing for the elderly, such as the activation of housing pensions and the support for retirement home lease conversion.