Smaller households drive Asia-Pacific housing crunch

Faster construction and expanded rental markets could fix the problem.

Private developers and governments across the Asia-Pacific region are struggling to meet housing demand as more people form smaller households, increasing the need for individual units even in cities where population growth is slow.

This has prompted calls for faster construction, streamlined approvals, and expanded rental markets.

“Even if the population is not growing rapidly, we need more individual housing units to accommodate everyone,” Mark Cooper, senior director of thought leadership at ULI Asia-Pacific, told Real Estate Asia via Zoom.

A recent ULI study found that only seven of 51 market segments in the region offered attainable housing—homes priced at five times the median income or less—in 2024. Cities where housing remains relatively attainable include Singapore, Melbourne, and Kuala Lumpur.

Singapore’s abundant supply of public housing is a key factor in its affordability, said Alan Cheong, executive director for research and consultancy at Savills Singapore.

“For countries that did not provide sufficient public housing in their earlier years of development, even if the country develops rapidly and income rises accordingly, private house prices will outstrip median household income,” he said in an emailed reply to questions.

Cheong said house prices often track the earnings of top-income groups, leaving lower-income households priced out. In South Korea, for instance, housing is affordable in provincial cities but remains costly in Seoul, where population density reaches 16,000 people per square kilometre and public housing supply lags.

Cooper said new construction techniques are one way to accelerate homebuilding and reduce costs. “If you can construct a building in half the time, it would not necessarily be half the price, but it will certainly be cheaper.”

Planning processes also play a key role. He noted that streamlining approvals and shortening project timelines could significantly cut costs.

Rental housing is another potential solution. Unlike Western markets, where institutional investors manage large multi-family properties rented at reasonable rates, the Asia-Pacific region has limited institutional rental housing.

“Boosting the multi-family market across the region would be a crucial step in addressing housing affordability,” Cooper said.