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House Price and Bank Lending in a Premium Submarket in Korea

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Author Info

  • Heeho Kim

    ()
    (School of Economics and Trade, Kyungpook National University, Daegu, Korea)

  • SaeWoon Park

    ()
    (Department of Business Administration, Changwon National University,Changwon, Korea)

  • Sun Hye Lee

    ()
    (Department of Business Administration, Changwon National University,Changwon, Korea.)

Abstract

This paper studies the abnormal price behavior of Kangnam, a premium (high price) housing submarket in Seoul, Korea, which addresses the correlation between house prices, bank lending, and other factors, including income. Kangnam experienced the most dramatic price escalation during the study period (1999-2009) despite Korean government policies to stabilize house prices in 2005 and the U.S. subprime crisis in 2008. The empirical result shows that even though the house price in a premium market is, to some degree, positively influenced by income, it is not affected by bank lending in the short-run while negatively affected in the long-run. This suggests that a premium housing submarket has a peculiar price dynamics of its own unlike the other submarkets which seem to comply more or less with our notion of a general economic theory, especially in terms of house prices and bank lending.

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Bibliographic Info

Article provided by Asian Real Estate Society in its journal International Real Estate Review.

Volume (Year): 15 (2012)
Issue (Month): 1 ()
Pages: 1-42

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Handle: RePEc:ire:issued:v:15:n:01:2012:p:1-42

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Postal: Asia Real Estate Society, 51 Monroe Street, Plaza E-6, Rockville, MD 20850, USA
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Web page: http://www.asres.org/

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Postal: Asian Real Estate Society, 51 Monroe Street, Plaza E-6, Rockville, MD 20850, USA
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Related research

Keywords: Kangnam; Premium Housing Submarket; House Prices; Bank Lending;

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References

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