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Korea’s development finance at the crossroad

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Frame of Image for construction or purchase of large houses, and for other real estate businesses. Since official housing finance could only partially support real estate developers and home buyers, peculiar financial instruments which do not involve financial intermediaries have been developed and widely used. For home owners, the Chonsei rental system with which an owner of a house effectively borrows from the tenant has been popular. For home builders, the pre-sale of new houses has been the norm. The rules on housing development and supply allows the home builders be paid the contract deposit and interim payments by the home buyers before the houses are completed. In effect, home buyers directly supply funds to the builders without the involvement of financial intermediaries. In 1994, such contract deposits and interim payments amounted to 26 trillion won, 3.5 times as much as the housing construction loans supplied by financial institutions in that year (Lee and Cho, 1995). In the wake of the Asian economic crisis, as part of the sweeping economic reform to cope with the crisis, major deregulation of the real estate sector was taken in 1998 and the years that follow. In February 1998, the government abolished the restriction on real estate loans as part of financial sector deregulation measures. It was expected and subsequently proved to benefit home building, non-housing real estate development, and acquisition of existing houses. In addition, the government established legal framewor


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Title Korea’s development finance at the crossroad
Similar Titles
Material Type Proceedings
Author(English)

Son, Jae-young

Publisher

[Seoul]:Konkuk University(Dept. of Real Estate)

Date 2012-09
Event

Contemporary Real Estate Issues in Korea & China

Pages 30
Subject Country South Korea(Asia and Pacific)
Language English
File Type Documents
Original Format pdf
Subject Economy < Financial Policy
Holding KDI; KDI School of Public Policy and Management