Economy, explained.
Home ownership among Australians in their late 20s fell from 43% to 36% between 2001 and 2021, and among those in their early 30s from 57% to 50% (Shanjir H | Photo4life AU/Unsplash)
In Australia, Japan and South Korea, households pay for old age with housing. Whether that is a trap is a matter of design.
Subscribe to The Informer for monthly expert analysis, and to Events for advance notice of visiting world leaders and distinguished guests.
You may unsubscribe from Lowy Institute newsletters at any time. For information on our privacy practices and how to unsubscribe, see our Privacy Policy.
Asia’s housing trapAsia’s housing trap
In Australia, Japan, South Korea and Singapore, property has become the main vehicle through which households fund old age. As people retire from the workforce, they want the certainty of their own home. But higher house prices also feed into investments – making property the question that has resisted every attempt at housing reform across the Asia-Pacific.
This carries political ramifications. In Australia, it is playing out through legislation now before a senate committee (Opens in new window) that would limit negative gearing – the ability to claim a loss against other income, reducing tax. This comes after years of debate about younger generations in particular being priced out of home ownership – between 2001 and 2021, home ownership among Australians in their late 20s fell from 43% to 36%, and among those in their early 30s from 57% to 50%. (Opens in new window)
The contested politics are familiar. But beneath them lies a constant: a government that moves to cool prices is not solely adjusting a market. It is reaching into the retirement security of the asset-owning voters carrying the most electoral weight.
The real question is not whether housing and retirement can be severed … but whether a housing system built around retirement can be redesigned once in place.
This fusion has a common origin. OECD data published in 2025 (Opens in new window) shows the net pension replacement rate (the share of pre-retirement income a public pension replaces) at under 35% in Australia, below 40% in South Korea and around 42% in Japan. The OECD average is 63%. Where the state pension falls short, households cover the difference, and the asset they reach for is property.
The result is a generation’s retirement security tied to house prices that cannot be allowed to fall. What decides whether this becomes a trap is how deliberately the connection is managed.
Singapore made the connection on purpose. The Central Provident Fund (Opens in new window) channels compulsory retirement savings into home ownership, and the state built the supply to match: subsidised flats, build-to-order construction, and resale rules that keep prices within reach of the incomes buying them. The outcome is a society where more than 90% of resident households own their home and around three quarters live in public housing (Opens in new window), yet those flats have stayed within reach of ordinary incomes. Singapore fused the two more tightly than anyone and engineered its way around the trap. That is the benchmark against which the region’s difficulties become legible.
The other three fused by default. In Japan, the fiscal strain of one of the world’s fastest-ageing populations (Opens in new window) left owner-occupied property as the default store of private wealth, with no equivalent framework to support affordability. In South Korea, Seoul home prices have run at close to 14 times median annual income (Opens in new window), well above the long-term average and resilient to repeated intervention. In Australia, saving a 20% deposit now takes an average of more than 10 years (Opens in new window), pulling private savings towards established property. Each reached the same dependence as Singapore, but without doing so by design. Hong Kong, repeatedly ranked the world’s least affordable major housing market (Opens in new window), shows where that path can end.
The costs are now emerging on two sides: government budgets and household wealth.
Busan, South Korea (Juliana Lee/Unsplash)
The IMF projects South Korea’s public pension costs to rise by as much as 4% of GDP by 2070 (Opens in new window). In March 2025, its parliament passed the first rise in the pension contribution rate in 27 years (Opens in new window), a response to projected funding shortfalls. Superannuation assets in Australia alone stand at $4.5 trillion (Opens in new window), and from 1 July 2026 a new 15% tax applies to earnings on balances above $3 million (Opens in new window), a sign the retirement side of the ledger is moving too.
That is what makes Australia’s proposed reforms (Opens in new window) worth watching abroad. They focus on the tax treatment of housing and how households save for old age, not at demand alone. The real question is not whether housing and retirement can be severed, which Singapore shows is neither possible nor necessary, but whether a housing system built around retirement can be redesigned once in place. Japan and South Korea will be watching the answer closely, both facing the same question and yet to act.
Every year the gap between asset values and wages widens, the room to adjust narrows. Treat today’s ceiling as permanent, and in a decade, it may prove to be.
Any opinions expressed belong solely to the author and do not represent the views, positions or policies of any other individual, organisation, or entity.
About the author
Nikko Riazi
Nikko Riazi is a government relations and public policy professional with cross-sector experience spanning infrastructure, financial services, international trade and investment, and the public service.
The most-pressing world events explained by Lowy Institute experts and global contributors, in your inbox, every Thursday.
You may unsubscribe from The Interpreter at any time. For information on our privacy practices and how to unsubscribe, see our Privacy Policy.
