Global Housing Prices Surge... "Germany, UK, and Other Countries Respond by Expanding Supply"

[Asia Economy Reporter Donghyun Choi] Amid a global surge in housing prices following the global financial crisis, an analysis has emerged that countries worldwide are focusing on expanding supply as a solution.

On the 23rd, the Korea Research Institute for Construction Industry (KRICI), in collaboration with the Korean Housing Association, held an online seminar titled "Housing Markets and Policies in Global Cities." At this event, they analyzed the housing price increases and policy responses in six countries: Germany, the United Kingdom, the United States, Australia, Japan, and Singapore. KRICI asserted that many of these countries are responding to the rapid rise in housing prices with supply expansion-centered policies.

Germany was regarded as having the most stable housing market worldwide until just before the financial crisis, but over the past decade, housing prices in Germany's seven major cities have risen by 118.4%, and rents have increased by 57%. Yoonkyung Heo, a research fellow at KRICI, explained, "The sharp rise in housing prices and rents in Germany, which was long considered a stable market, shows that a supply market that is inelastic to demand cannot guarantee long-term stability. Currently, Germany's housing policy appears to be exploring a new balance point between tenant protection and market-friendly policies."

In the United Kingdom, housing prices have surged, and in the private rental market, tenants' housing cost expenditures are approaching 50% of their standard income, increasing the burden of housing costs. It is estimated that one in seven people in England live in poor housing conditions. In response, the UK government has diagnosed the root cause of housing market instability as a shortage of housing supply and is making national efforts to stabilize the housing market by announcing comprehensive housing policies that include supply expansion measures. Taehee Lee, a deputy research fellow at KRICI, stated, "Although there are some housing purchase support policies for the homeless, such as Didimdol loans and newlywed hope towns, the beneficiary scope is very narrow and supply is limited. Like in the UK, a 'housing ladder support policy' targeting the majority of homeless people, including the middle class, is necessary."

The U.S. presentation introduced Portland's inclusive housing program, which provides appropriate incentives to developers to foster a mutually beneficial supply of affordable housing. This program is a core policy of Portland city that activates development projects by offering urban planning incentives while simultaneously expanding affordable housing supply for low-income households. By providing developers with suitable incentives and flexible options for public contributions, it seeks a cooperative housing supply approach.

Australia's housing market experienced a price surge until 2017, prompting policies that simultaneously utilize supply expansion through increased floor area ratios and demand suppression through loan regulations. Japan has seen a sharp rise in prices mainly for newly built condominiums, but due to aging and declining real incomes of urban residents, actual demand has not increased. Professor Jinyu Kim of Kyonggi University explained, "In Australia, where prices surged until 2017, policies to expand housing supply, such as raising allowable floor area ratios and increasing apartment permits around transit stations, are continuously pursued, alongside demand suppression policies like loan regulations." He added, "However, there is a clear awareness of the side effects of demand suppression policies, such as declining homeownership rates and reduced supply of rental housing."

Singapore supplies public housing to the majority of its citizens at prices lower than the market rate and utilizes housing finance and subsidy support systems that link home purchases with pension schemes. Professor Gwanok Lee of the National University of Singapore emphasized, "If a majority of residents own homes and can share in real estate inflation, economic disparities caused by housing can be alleviated, and social conflicts reduced. Our housing policies also need to expand home purchase opportunities for newlyweds and young people and improve the effectiveness of subscription systems and housing finance support measures to enhance housing stability."

This content was produced with the assistance of AI translation services.