How the rise of single-person households impacts Korea’s residential market

Over 40% of households in Korea are single-person households.

According to a Savills report, as of late 2023, single-person households accounted for 34.3% of all households in the Seoul metropolitan area, up sharply from 25.9% in 2015.

This trend extends beyond the capital. The report said that by March 2024, the total number of single-person households in Korea exceeded 10 million for the first time, comprising 41.8% of all households.

Here’s more from Savills:

Several factors have driven this shift, including the rise of nuclear families, an aging population, declining marriage rates, delayed first marriages, and low birth rates. Since housing demand is closely linked to household size, the continued growth of single-person households is expected to reshape demand patterns, sustaining strong demand for small residential units such as officetels.

The proportion of households living in nonapartment housing (single-family homes and multiplex houses) in the metropolitan area has been steadily declining since 2017, while officetel residence rates have surged. Officetels, classified as non-residential facilities, saw their household share nearly double, rising from 2.8% in 2017 to 5.2% in 2023, driven by growing demand for compact living spaces.

While professionally managed rental housing incurs higher operating costs, leading to 10-20% higher rents than privately owned studios and officetels, demand for well-maintained housing remains strong, supporting investment potential.

Moreover, individual landlords often rely heavily on deposits as leverage, restricting their flexibility in adjusting rent-deposit ratios. With Jeonse Fraud concerns accelerating the shift to monthly rent, corporate rental housing with lower deposits and higher rents is expected to remain appealing to tenants.

Regulatory changes, influenced by political shifts, could impact the rental market, but the government’s consistent efforts to promote private-sector involvement in rental housing development continue. With public-sector rental supply constrained amid a weakened construction market, private investment is set to play a growing role.

Foreign investors, including KKR, ICG, Morgan Stanley, and Hines, have already entered Korea’s rental housing sector, while CPPIB, M&G, and Greystar are reportedly exploring market entry, further stimulating sector growth.