Owning a home has long symbolized stability, security, and success in societies across the world. Yet, for millions today, this dream has grown increasingly elusive. In Australia and South Korea, two nations separated by oceans but connected by the shared ideal of homeownership, the housing crisis has reached critical levels. While the symptoms may appear distinct, the underlying causes reveal striking parallels: urban concentration, low-interest rates, and government policies that have inadvertently fueled an untenable surge in housing prices.
The stark realities of this crisis are impossible to ignore. Median housing prices in Australia have nearly doubled over the past decade, leaving aspiring homeowners in cities like Sydney and Melbourne grappling with affordability issues akin to those in global metropolises like New York and Hong Kong. Meanwhile, in South Korea, Seoul’s infamous “Jeonse” rental system, once seen as a viable alternative to homeownership, has itself become a driver of spiraling real estate costs, locking younger generations into a cycle of financial precarity.
Across these two nations, the story of housing is not just about bricks and mortar but about societal shifts, economic pressures, and a growing generational divide. As wealth accumulates in the hands of established homeowners, younger generations find themselves increasingly excluded from the housing market, sparking fears of a two-class society. With both countries navigating the challenges of post-pandemic economic recovery, the housing crisis looms large as a litmus test for their political leadership and societal priorities.
How did it come to this? What lessons can these nations learn from each other, and what can the rest of the world take away from their experiences? We delve into the global and local forces at play, unraveling the intricate dynamics that have made housing one of the most pressing issues of our time.
Shared Drivers of the Housing Crisis
In the wake of the COVID-19 pandemic, governments worldwide deployed unprecedented monetary policies to stave off economic collapse. Central banks slashed interest rates to near zero, flooding markets with liquidity. While this strategy invigorated struggling economies, it inadvertently fueled a surge in real estate demand. Cheap borrowing costs allowed more individuals to secure mortgages, pushing house prices to dizzying heights. In Australia and South Korea, this phenomenon was acutely felt, transforming the housing market into a battleground of soaring prices and mounting inaccessibility.
Urbanization trends have also played a pivotal role in shaping housing crises globally. Cities like Sydney, Melbourne, and Seoul are epicenters of economic opportunity, drawing millions of people into their orbit. With job prospects, infrastructure, and educational institutions concentrated in these metropolitan hubs, housing demand has outpaced supply. The inevitable result? Skyrocketing property values that leave younger and lower-income populations grappling for options in increasingly unaffordable markets.
Real estate’s transformation from a basic human necessity to a high-yield investment vehicle has been another key driver of the housing crisis. Across the globe, governments have inadvertently incentivized this shift. Tax breaks for property investors, speculative buying, and policies favoring second-home purchases have created a landscape where owning property is less about living and more about leveraging financial returns. This systemic change has marginalized those seeking homes for shelter, fostering inequality and exacerbating the housing affordability crisis.
These three global forces – pandemic-era liquidity, urban concentration, and the financialization of real estate – converge to form the foundation of a worldwide housing predicament. Yet, as we turn to Australia and South Korea, the nuanced interplay of these factors reveals how shared challenges can manifest in strikingly similar patterns while still reflecting each nation’s unique socio-economic fabric.
Comparing Australia and South Korea: Commonalities
As Australia and South Korea grapple with housing affordability, their respective crises highlight a tapestry of shared challenges, underscoring how global economic forces manifest locally. Despite cultural and structural differences, the two nations converge on several key issues that have exacerbated housing inequities, creating a generation of aspiring homeowners locked out of the market.
In both countries, well-intentioned government policies aimed at stimulating homeownership inadvertently fueled speculative markets. In Australia, incentives like negative gearing and tax benefits for investors encouraged the purchase of second homes, driving demand and inflating prices. Similarly, South Korea’s policies, such as relaxed loan regulations during certain periods and government-backed home purchase programs, created an environment ripe for speculative buying. As policies oscillated between interventionist and market-driven approaches, they often left buyers and renters navigating a volatile landscape.
The demand for housing in major cities outpaces supply in both nations. While Australia’s sprawling urban centers like Sydney and Melbourne suffer from restrictive zoning laws and resistance to high-density developments, South Korea faces bottlenecks due to a lack of available land and protracted regulatory processes in Seoul’s metropolitan area. In both cases, urban housing shortages have led to spiraling prices, disproportionately affecting middle- and low-income households.
The soaring cost of housing in both countries has deepened the divide between generations. Older Australians and Koreans, who purchased properties decades ago, have seen their wealth grow exponentially, benefiting from years of price appreciation. Meanwhile, younger generations struggle with stagnant wages and rising living costs, unable to save for down payments. The result is a growing cohort of renters resigned to a lifetime of leasing, further exacerbating wealth inequality.
In both nations, economic opportunities, infrastructure, and education are heavily concentrated in major cities. Australia’s Sydney and Melbourne house a significant portion of the population, just as Seoul dominates South Korea’s economic and cultural landscape. This urban magnetism has driven intense demand in these areas, leaving rural regions underdeveloped and less attractive for investment. The concentrated demand has created an environment where owning property in these cities is often out of reach for the average citizen.
The transformation of housing from a necessity to a commodity is a shared phenomenon. In both countries, real estate is viewed as a reliable and lucrative investment. This perception has turned housing markets into arenas for speculative activity, with properties bought and sold as assets rather than homes. This trend not only drives up prices but also sidelines those who view homeownership as a basic life goal rather than a financial strategy.
These parallels reveal a shared crisis: the commodification of housing is eroding the dream of homeownership. Policies designed to uplift citizens have often been exploited by market dynamics, creating a system that favors those with existing wealth. The stories of young Australians queuing for hours at rental inspections mirror the struggles of South Korean millennials battling soaring Jeonse deposits. In both nations, the housing crisis is not just an economic problem but a societal reckoning, demanding immediate and bold interventions.
Unique Dynamics in Each Country
South Korea: A Nation Bound by Jeonse and Seoul’s Magnetic Pull
South Korea’s housing market operates under a unique rental system known as jeonse, where tenants pay a lump sum deposit instead of monthly rent. While this system initially provided tenants with financial stability and homeownership pathways, it has increasingly become a double-edged sword. Jeonse prices skyrocketed as landlords funneled deposits into speculative housing investments, driving up real estate values nationwide.
At the heart of South Korea’s housing challenge lies Seoul, the capital region that serves as the nation’s economic, educational, and cultural nucleus. Over half of the country’s population resides in Seoul and its surrounding areas, creating intense housing demand that far outstrips supply. Government efforts to decentralize economic activity have largely failed, and speculative buying continues to exacerbate the crisis.
Further complicating matters, South Korea’s housing policies have vacillated between deregulatory measures that fuel investor enthusiasm and restrictive policies aimed at cooling the market. This policy whiplash has eroded trust and created market volatility, leaving prospective homeowners trapped in uncertainty.
Australia: Low Density, High Demand, and Global Interests
In Australia, the housing crisis is fueled by a different set of pressures. The country’s low urban density is both a cultural hallmark and a policy dilemma. Major cities like Sydney and Melbourne are among the world’s least dense metropolitan areas, yet proposals for high-density housing routinely face local opposition. The infamous “Not In My Backyard” mentality has stalled development projects, exacerbating supply shortages in the areas where demand is highest.
Unlike South Korea, Australia’s real estate market has been deeply shaped by foreign investment, particularly from China. While foreign capital has invigorated luxury property markets, it has also driven up prices, pushing local buyers out of contention. Calls for stricter regulations on overseas ownership have grown louder as housing becomes increasingly unaffordable for ordinary Australians.
Another critical issue is Australia’s declining public housing initiatives. Once a cornerstone of urban planning, public housing construction has plummeted in recent decades, leaving low-income families vulnerable. Combined with rising construction costs and labor shortages, Australia’s housing supply remains woefully inadequate to meet growing demand.
Cities and Housing: Shadows Beneath the Triumph
Cities are among humanity’s greatest inventions, as Edward Glaeser argues in his seminal book Triumph of the City. They foster creativity, innovation, and economic prosperity through dense networks of interaction. Yet, the very density that drives urban success can also create significant challenges. The housing crises in South Korea and Australia highlight how cities, despite their immense power, can become victims of their own triumphs.
South Korea: The Capital-Centric Challenge Amidst Regional Decline
In South Korea, Seoul is the undeniable center of gravity. The capital and its surrounding areas, collectively known as the capital region, account for more than 50% of the national population and an even higher proportion of its economic activity. This extreme urban concentration has created a gaping disparity between the capital and rural regions, leaving much of the country’s land underutilized and its smaller cities struggling to remain economically viable.
This capital-centric model amplifies housing shortages in Seoul and nearby cities, driving prices to levels unaffordable for the average resident. Meanwhile, rural areas face population decline and economic stagnation, creating a vicious cycle where young people leave for better opportunities in the capital, further deepening regional disparities.
Adding to this complexity is South Korea’s falling birthrate and aging population, which threaten long-term economic stability. While the capital region continues to expand upward and outward, depopulated rural areas witness abandoned homes and shrinking communities—a stark contrast to the frenzied demand for housing in urban centers.
Australia: The Power of Selection and Urban Concentration
Australia, by contrast, has embraced a model of selective urban development, focusing its resources on a handful of key cities. Sydney and Melbourne, home to nearly 40% of the population, are engines of economic growth and cultural identity. While this model has allowed Australia to concentrate infrastructure and opportunities in these global hubs, it has also led to acute housing shortages and affordability crises in these cities.
Unlike South Korea, where population imbalances arise from natural constraints and economic centralization, Australia’s low population density and deliberate urban planning choices have prioritized a few cities over broader regional development. While rural and smaller urban areas in Australia retain livability, they lack the economic dynamism needed to attract and sustain larger populations, leaving many areas underdeveloped.
Housing Accessibility
In both countries, housing in major urban centers has become accessible primarily to the wealthy. Rising property prices have created a stark divide between those who own property in central areas and those who are increasingly relegated to renting or moving to more affordable, peripheral locations. This growing disparity between urban property owners and disenfranchised renters threatens to create a two-tiered society, where access to stable housing becomes a marker of economic privilege.
The labor and population dynamics in South Korea and Australia also reveal parallel challenges. South Korea faces a dual crisis: its capital cities are overpopulated and under constant pressure to accommodate more people, while rural regions experience depopulation and economic decline. Adding to these challenges is the country’s plummeting fertility rate, which compounds concerns about long-term demographic and economic sustainability.
Australia, on the other hand, struggles with labor shortages in rural areas, as its concentrated urban development model fails to distribute opportunities evenly across the country. At the same time, housing affordability pressures in Sydney and Melbourne make it increasingly difficult for workers to live near these cities, affecting economic productivity and growth.
Ultimately, South Korea and Australia illustrate the universal challenges of urbanization. Whether it is the capital-centric development of South Korea or Australia’s concentrated urban model, both approaches have resulted in regional imbalances, housing inaccessibility, and labor shortages. These shared consequences underscore the need for more equitable and sustainable urban development strategies, tailored to the unique circumstances of each nation but rooted in the common goal of inclusive growth.
Finding Balance
Edward Glaeser’s assertion that cities thrive on density and adaptability underscores the need for balance in urban development strategies. South Korea must tackle its capital-region dependency by incentivizing economic growth in rural areas and smaller cities, while also regulating speculative markets that distort urban housing affordability. Conversely, Australia must reimagine its low-density suburban ideal, embracing higher-density housing and decentralized development to alleviate pressure on its major cities.
Both nations share the challenge of viewing housing not just as a market-driven commodity, but as a fundamental need. The growing disparity between urban winners and regional losers, combined with unsustainable housing models, threatens their long-term prosperity. Ultimately, solving these issues requires rethinking priorities and leveraging the inherent potential of cities to serve all their citizens, not just a select few.
