Good Housing Booms, Bad Housing Booms:High-frequency Identification of Housing Speculation and Its Macroeconomic Consequences

Leveraging Korea's unique jeonse system-a lump-sum lease arrangement that enables inference of intrinsic housing values—and urban district-level monthly-frequency data, this paper proposes a novel method to decompose housing price fluctuations into supply, residential demand, and speculative demand shocks. We find speculative demand accounts for nearly 50% of cumulative housing price growth in Korea and over 60%in the Seoul metropolitan area. Importantly, housing booms driven by residential demand increase regional consumption, employment, and output (“good booms†), while those driven by speculation reduce them ("bad booms"). Using comprehensive quarterly individual panel data, we show that only speculative demand shocks trigger excessive household leverage, creating a debt overhang that explains these differential aggregate effects. While monetary easing significantly amplifies speculative demand, an equivalent tightening fails to produce a comparable contraction. Conversely, macroprudential tools-such as lower loan-to-value limits-curb speculative surges more effectively, yet they also risk dampening residential demand.