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Accounting for Changes in House Prices and Rent in Korea, 2001–2016

Author

Listed:
  • Jay H. Hong

    (Seoul National University)

  • Choonsung Park

    (Korea Institute of Finance)

  • Joon Song

    (Seoul National University)

Abstract

We quantitatively evaluate the relative contribution of macroeconomic fundamentals and housing-related policies to the changes in real house prices, rent, and household welfare in Korea. We show that the observed changes in real house prices and rent in 2001–2016 are mainly attributed to a decrease in the real interest rate, an increase in real income, and an increase in the aggregate housing supply. However, housing-related policies turn out to have little impact on the price changes, contrary to the common belief that such policies significantly affected the housing market over this period. We also find that the welfare implications of fundamentals and housing-related policies vary by household income.

Suggested Citation

  • Jay H. Hong & Choonsung Park & Joon Song, 2020. "Accounting for Changes in House Prices and Rent in Korea, 2001–2016," Korean Economic Review, Korean Economic Association, vol. 36, pages 249-283.
    • Handle: RePEc:kea:keappr:ker-20200101-36-1-09
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    References listed on IDEAS

    as
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    6. Sommer, Kamila & Sullivan, Paul & Verbrugge, Randal, 2013. "The equilibrium effect of fundamentals on house prices and rents," Journal of Monetary Economics, Elsevier, vol. 60(7), pages 854-870.
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    Cited by:

    1. La, Jung Joo, 2023. "Macroeconomic effects of basic income funded by land holding tax," MPRA Paper 116151, University Library of Munich, Germany.

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    More about this item

    Keywords

    Housing Policies; Taxation; Housing Price;
    All these keywords.

    JEL classification:

    • E65 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Studies of Particular Policy Episodes
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand

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