A study of changing of the Korean and Japanese housing price in accordance with the change of population structure
Authors:   Asia-Europe Perspective Association, Choi Jeong-Il , Lee Ok-Dong 
Published: June 2018

Korean society is becoming the most rapidly aging society in the world, and baby-boomer generation will soon be retired. The number of Householders, who are willing to own their property to live in, is already declining. Social polarization is accelerating and family loan for buying real estate is rising as a serious issue. These sorts of phenomena are alike to those of Japan, the country where experienced of collapsing real estate bubble in 1991.
Therefore, it is important to predict to how real estate business might flow as it takes the biggest part of our asset. To estimate it3s long-term flow, the composition of population will be one of the most important variable among lots of variables to analyze.
In the future, Korean population will be rapidly aging while producing population declines. As a result, lots of unpredicted events would take place, and it is too sure that this changing of population structure may affect our economy and asset market.
In this research, we scoped on how changing of Korean and Japanese population structure may cause housing price, and function of aging of householders and housing price flows. Generally, as population grows, the number of householders increases, which means the demand of houses rises and the price will go high while supply meet the demand.
There are a few factors cause the rise of housing price. Firstly, long term policy of dropping interest rate. Secondly, fierce loan competition of financial institutions. Thirdly, relaxation of regulations regarding real estate such as reducing tax on transaction or property itself. For the last, weakening risk management function due to aggressive investment.
After 1980’s, decreasing interest rate took major role of fluctuation of Japanese and Korean real estate market. However, it is not negligible that changing in population structure affect housing price in certain amount.
In this research, we looked into relationship between changing population structure and housing price of Korea and Japan and predicted how Korean real estate market would change, based on Japan’s case which was ahead of times.
Since 1991, the year of Japanese real estate market bubble began to collapse, the market itself has been bearish up till now for over 20 years. The year 1991 is coincident to the time that Japanese first baby-boomer generation began to retire and entered into aging society. As for us, the first baby-boomers who were born in between 1955 and 1963 are supposed to retire soon.
It is remarkable that our low birth rate, aging population and social polarization problems are pretty much similar to those of Japan 20 years ago. In Korea, the number of householders who are active of possessing own property is declining since 2011 from the highest, and aging progresses most rapidly in the world.
Collapsing of Japanese real estate bubble has been progressing over 20 years already. Housing price of 6 largest cities in Japan is only 60% of its highest 20 years ago. As Korea society shows its rapid aging, declining number of householders, social polarization, increasing private loan, which were noticed from Japanese case, we can assume that Korean real estate market bubble is already collapsing.
Collapsing of Japanese real estate bubble has been progressing over 20 years already. Housing price of 6 largest cities in Japan is only 60% of its highest 20 years ago. As Korea society shows its rapid aging, declining number of householders, social polarization, increasing private loan, which were noticed from Japanese case, we can assume that Korean real estate market bubble is already collapsing.
From the changes in housing price and aging index of Japanese six large cities, it can be seen that housing price was dropped heavily while aging index was increased greatly before and after 1990.