In 2024, the Bank of Korea proposed easing the concentration in the Seoul metropolitan area and stabilizing housing prices as key measures to address the low birth rate crisis. Research indicates that South Korea’s current fertility rate stands at a critical 0.78, with the primary causes identified as intense competition and housing insecurity in the metropolitan area.
The Bank of Korea analyzed that if the population concentration in the Seoul metropolitan area were reduced to the OECD average level, the birth rate could increase to 1.194. However, the political sector is exacerbating the issue by reinforcing metropolitan concentration to appeal to voters in the region.
A discussion sparked in 2023 exemplifies this issue, particularly regarding the incorporation of Gimpo City into Seoul. Amid discussions on administrative district reorganization, driven by Gyeonggi Province’s proposal to divide into northern and southern provinces, Gimpo City introduced a third option—its incorporation into Seoul—causing controversy. Recently, the ruling People Power Party announced its intent to adopt the incorporation of Gimpo into Seoul as its official stance. Meanwhile, Guri City, located east of Seoul, also stated that it would conduct a feasibility study on joining Seoul, further fueling the debate over the creation of a “Mega Seoul” with surrounding satellite cities.
Local governments such as Gimpo and Guri argue that incorporation into Seoul would enhance their competitiveness and improve transportation and infrastructure. However, a closer look reveals that the primary motivation behind the push is expectations of rising real estate prices due to the “Seoul premium.” While infrastructure development and policy-driven investments may yield long-term benefits, real estate gains offer immediate financial incentives. Consequently, politicians and some residents support the Mega Seoul initiative primarily for short-term economic benefits and capital appreciation.
Currently, Seoul continues to attract an increasing population, driving real estate prices to soar. In contrast, property values in regional areas are plummeting, exacerbating polarization. According to a study by Real Estate 114, the overall housing subscription competition rate in 2023 was 18.67:1 in the Seoul metropolitan area (Seoul, Gyeonggi, and Incheon), compared to just 6.46:1 in regional areas—a nearly threefold difference. Additionally, data from the Ministry of Land, Infrastructure, and Transport showed that as of the end of 2024, 81.3% (50,652 units) of the country’s 65,056 unsold homes were concentrated in regional areas. While Seoul grows increasingly competitive, regional areas face depopulation and declining housing demand.
This trend directly contradicts the Bank of Korea’s proposed solutions to the low birth rate crisis. The push for Mega Seoul, which accelerates regional decline and metropolitan overcrowding, is detrimental to South Korea’s long-term development.
Research supports concerns about the impact of housing prices on fertility rates. According to the Korea Research Institute for Human Settlements, a 1% increase in housing prices leads to a 0.002 decrease in the birth rate. A study by the Korea Economic Research Institute also found that individuals in rental housing (jeonse or monthly rent) have significantly lower marriage and childbirth rates than homeowners. Specifically, the probability of first childbirth for jeonse tenants is 28.9 percentage points lower than that of homeowners, while for monthly renters, it is 55.7 percentage points lower. These findings highlight the critical role of housing stability in marriage and childbirth decisions.
Despite this, the political sector remains focused on short-term electoral gains rather than the nation’s long-term development. If metropolitan concentration persists, rising housing costs and intensified competition will make birth rate recovery even more challenging.
To truly prioritize South Korea and future generations, policymakers must make the following strategic decisions: First, efforts should be made to decentralize the Seoul metropolitan area and promote balanced regional development. The relocation of businesses and public institutions to regional areas should be expedited, and economic revitalization policies for these areas should be strengthened. Second, housing stability policies must be reinforced to help young people make secure decisions about marriage and childbirth. The supply of housing for actual residents should be increased, and financial support for first-time homebuyers and newlyweds should be expanded. Third, a birth-friendly environment must be fostered. Job stability should be enhanced, and policies should be implemented to reduce childcare and education burdens.
As long as the political sector remains fixated on short-term election strategies and real estate policies, resolving South Korea’s low birth rate crisis will remain a distant goal. Now is the time for long-term policies that prioritize national sustainability over short-term political gains.
