This study evaluates a housing shortage in Korea and identifies reasons deficiency housing quantity.
Currently, Korea is experiencing a serious housing shortage, especially in cities where the problem is expected to become more severe. This study intends to discuss the current housing market and analyzes the factors that determine housing supply and demand.
Korea's housing penetration rate shows its housing supply rate has been increasing more rapidly than that of population growth. However, as the population concentrates in cities and the number of nuclear families increased, the supply of houses did not meet the growth in the number of households in cities. Such an increase in the housing shortage caused a decrease in the home ownership rate. In addition, limitations on living space resulted in the widespread construction of apartment complexes, a multi-family residential structure, rather than single-family houses. In the meantime, houses have grown larger despite the housing shortage, which means houses become multi-family housing in order to make up the deficiency in the number of houses. The trend towards larger houses can also mean distribution of income has become less equal, and people in the high-income bracket are engaged in housing speculation.
One of the most important reasons why housing supply did not meet demand is low investments in housing. Annual housing investment rate relative to GNP hovers around five percent, far below countries with advanced economies, where the housing penetration rate is much higher. Furthermore, Korea has a much higher rate of total fixed capital relative to GNP than other countries. Given this high rate, investments in housing are low priority for policy establishment in Korea.
Analysis of the housing market demand and supply factors in Korea, as well as their implications for policy, can be summarized as follows: First, when the fundamental goal of housing policy is to maximize housing service, appropriate policy cannot be established without a clear understanding of the definition of housing service. Existing studies on housing issues were focused on what effects income level has on housing demand. Third, housing finance has marginal effects or effects that are opposite to expectation, but the more new houses are supplied, the more housing finance increases. Fourth, it was suggested that substitution effects of quality and quantity need to be regulated when quantitative change in housing supply and demand is studied. Fifth, there is a hypothesis according to which current housing demand increases when housing demand is caused by speculative motives. When expected house price growth increases, current housing demand increases. However, this study did not support that hypothesis. Six, when the unemployment rate is high and all the other conditions remain static, new housing demand is decreased. Lastly, supply function suggests the number of new houses is directly proportional to price changes.
주택보급현황과 당면과제(Current housing supply and challenges)
주택수급결정요인분석을 중심으로(Focusing on analysis of factors deciding housing supply and demand)
|Series Title; No||정책연구시리즈 / 84-03|
|Subject Country||South Korea(Asia and Pacific)|
|Subject||Territorial Development < National Land Development|
|Holding||KDI; KDI School|