South Korea: Why is Seoul's population declining?

South Koreans are moving out of Seoul, with factors including the high cost of housing and the draw of suburbs and smaller cities for families with children.

Statistics published by the South Korean government on Monday show that 9.49 million people lived in metropolitan Seoul as of May of this year, down from a peak of 10.97 million residents in 1992.

The capital's population already fell below the 10 million threshold in 2016, and the new report from the Ministry of the Interior and Safety predicts that the number of residents could even contract to just 7.2 million by 2050.

That worst-case scenario would be a significant blow to the prestige of a city that has long enjoyed the reputation of being one of the largest and most influential capitals in the region. 

It would also raise questions over the economic vitality of a city that until recently harbored ambitions of attracting multinational businesses leaving Hong Kong, amid a crackdown from Beijing. 

Seoul was particularly interested in luring firms in the finance sector, to rival Tokyo and Singapore as the key market in the Asia-Pacific region.

Why are people leaving?

Kim Hyun-jung swapped Seoul for the wide open spaces of Gangwon Province, in the northeast of the country, in 2015, and has few regrets about her decision.

"The main reason why people are leaving are house prices," she told DW. "Prices are rising really rapidly and it's just too expensive for many people to live in Seoul now."

Kim and her university professor husband left before prices really began to spike, for which they are grateful, she said.

In May 2017, the average price of a home in greater Seoul was 341 million Korean won (€252,000). By March of this year, the same property was changing hands for 626 million won. 

Prices under the uniquely Korean rental system known as "jeonse" have also climbed sharply, Kim said. Under a jeonse contract, the renter makes a lump sum payment of up to 80% of the market value instead of paying monthly rent. 

The property owner is then able to invest that money and at the end of the contract, typically two years, the deposit is returned. 

For Kim, a 44-year-old part-time teacher, there were a host of other reasons to leave Seoul, which is now about 2.5 hours away by car.

"It is really easy to find a house around where we live now, the homes are bigger and prices are much lower than in Seoul,” she pointed out. "The quality of life is much higher and my children can go outside and play instead of being surrounded by crowded places."

In addition, places at kindergarten were free and extracurricular classes for the children, including piano and taekwondo, are far cheaper.  

"I miss my friends and family in Seoul, of course, and I do like to go back to see them and to visit museums and the big department stores, but after a few days I am always ready to come home again," she said. "I like the fresh air, the relaxed pace of life and that there are no crowds."

Suburbs and satellite towns

Dan Pinkston, a professor of international relations at the Seoul campus of Troy University, says there has been a clear trend of people moving out of central area of the South Korean capital and relocating to suburbs and satellite towns.

"The government has invested heavily in transportation infrastructure, including extending subway lines and high-speed surface trains from these satellite communities so people can live further away but still commute into the city center," he said. 

"A lot of people like it as these new towns that have grown up have new facilities, modern schools and hospitals and a better quality of life, but they can still work in Seoul."

The decline in Seoul's population shows no sign of slowing, with serious implications for the economy.

A new study by global mobility company ECA International determined that Seoul is the 10th most expensive city for expatriates, with rent, transport and other living expenses factored into the equation.

Hong Kong topped the list for a third consecutive year, with Tokyo, Shanghai and Guangzhou all in the top 10 cities. 

As a consequence, many Korean corporations complain they are finding it difficult to recruit skilled foreign workers, particularly in the sciences, technology and engineering sectors. 

A new business culture 

Pinkston agrees that multinational companies looking for an alternative Asia-Pacific base of operations may go elsewhere, although that may be in part due to a shift away from the "traditional" way of doing business. 

"There are a lot of start-up tech companies emerging now, founded by young people who do not want to take the usual track of studying hard to get into a top school, a top university and then one of the biggest companies in Korea," he said. "We are moving away from that model."

And one big advantage of the modern tech-based economy, he pointed out, is that a company no longer needs to be physically headquartered in an expensive office property in the central business district of a capital. What might be good for an entrepreneur, however, could turn out less well for a city such as Seoul.

Edited by: Wesley Rahn