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Impacts of demand and supply-side interventions on South Korea’s housing markets: a dynamic housing-CGE analysis

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  • Euijune Kim

    (Seoul National University)

  • Ayoung Kim

    (Mississippi State University)

  • Kyung-Min Nam

    (University of Hong Kong)

Abstract

This paper examines the impacts of housing market policies in Korea by developing a dynamic computable general equilibrium model integrating regional housing markets and multiregional mobility. We compare simulation outcomes of demand- and/or supply-side approaches in housing market interventions and address how these various policy instruments affect housing prices, demand, and household welfare. Policy simulation results suggest that supply-based interventions would be more effective than housing tax policies for cooling down overheated housing markets without decreasing consumer welfare. Tax-based demand-side approaches result in a 1.8–2.2% housing price drop and a 1.1–1.2% welfare decline annually between 2021 and 2024. In the supply-side policy, investing in housing construction leads to 3.4–4.1% lower housing prices and 1.5–1.8% enhanced welfare.

Suggested Citation

  • Euijune Kim & Ayoung Kim & Kyung-Min Nam, 2024. "Impacts of demand and supply-side interventions on South Korea’s housing markets: a dynamic housing-CGE analysis," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 73(1), pages 397-429, June.
    • Handle: RePEc:spr:anresc:v:73:y:2024:i:1:d:10.1007_s00168-024-01274-1
    DOI: 10.1007/s00168-024-01274-1
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    More about this item

    JEL classification:

    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets

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