Apartment prices in Seoul are on the verge of setting a record for the longest streak of gains ever. According to the Korea Real Estate Board, the Seoul apartment sales price index rose for 84 consecutive weeks starting in the first week of February 2025. Lease and rental prices are climbing alongside them. In August, the Seoul apartment jeonse (a Korean lease system requiring a large lump-sum deposit instead of monthly rent) price index and the monthly rent price index rose 0.96% and 0.98% from the previous month, respectively. Attention turned to whether President Lee Jae-myung would shift housing policy at his news conference last week, but the president made clear he would maintain the existing approach. In particular, he identified the "single-pole concentration in the capital region" as the fundamental obstacle to stabilizing home prices there, and presented "balanced national development that diversifies the hubs of growth and development" as the solution.
The goal of "easing concentration in the capital region" itself enjoys broad support, because the side effects of that concentration are severe. When jobs, universities, hospitals and cultural facilities cluster in the capital region and people follow, competition for jobs intensifies and home prices rise. In such an environment, young adults hesitate to marry and have children. Regions outside the capital, by contrast, lose vitality as people leave. What matters is how the concentration is eased. Successive governments have set balanced development as a goal, yet concentration in the capital region has rarely slowed. Behind that lies a zero-sum view that the regions can thrive only if Seoul is held down. Policies that suppress housing demand and development in Seoul and move the city's functions and resources to other regions are an extension of that view. But making Seoul a less livable place does not make the rest of the country more livable.
Moreover, the decline in population forces a redefinition of what balanced development means. According to the National Data Office (Korea's statistics agency), population is projected to decline in 16 of the country's metropolitan cities and provinces, excluding Sejong, from 2039, and by 2052 the working-age population in eight of them is expected to shrink by more than 40% from 2022 levels. With fewer people, it is difficult to maintain schools, hospitals and transport networks in every region as they are. If balanced development policy in an era of population growth focused on where to allocate more people and resources, policy in an era of population decline must also consider where to concentrate them and where to scale back.
The government aims to overcome the limits of past policies that distributed resources evenly across every region, through a "selection and concentration" approach to balanced development that builds growth hubs by area. Yet what still comes first in policy debate is how many public agencies to move from Seoul to other regions. Discussion of how to create, and at what cost, communities outside the capital equipped with housing, education, health care, culture and transport is far less concrete. Nor is there a clear blueprint for redesigning the country's spatial structure in light of population decline, while housing policy leans toward suppressing demand for homes in Seoul. In the meantime, it is ordinary citizens who are bearing the cost for no good reason. In Seoul, many residents are struggling with rising housing costs. Restricting loans and raising tax burdens to suppress demand for expensive homes does not make the demand to live in Seoul itself disappear. The recent "flattening" phenomenon, in which home prices in the Seocho and Gangnam areas fall while prices outside Gangnam rise, can largely be read as the result of demand shifting to avoid the regulations.
What is more, as the supply of jeonse and monthly rental units shrinks in the wake of demand-management policies centered on owner-occupancy, housing insecurity among low- and middle-income households is deepening as well. Nor are regions outside the capital seeing much benefit. Home prices in some areas stir each time a public agency relocation or a large development plan is floated, but that in itself does not improve living conditions in those areas. Most regions still have found no clear way out of the outflow of young adults and population decline.
In the end, Seoul must renovate its aging housing and improve housing, transport and everyday infrastructure to strengthen its competitiveness as a global city, while a handful of hub cities outside the capital, bringing together jobs, education, health care and cultural facilities, must be properly developed. The remaining areas must strengthen their links to those hub cities and redesign everyday infrastructure to match a shrinking population. The perception that a choice must be made between Seoul and the rest of the country risks lowering Seoul's competitiveness without raising the regions' capacity to sustain themselves. Balanced development in an era of population decline must be a win-win strategy that builds Seoul into a better city while creating cities elsewhere where people can enjoy a good quality of life without going to Seoul.
