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Structural changes in Korea's rental housing market and market-friendly policy responses

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Frame of Image hibernation. Home transactions have picked up, and their prices have been rebounding, albeit at a slow pace. However, the market remains shrouded in uncertainty, mainly because the price movement has been weak despite the growing volume of home transactions, and the jeonse (long-term rental – mostly 2 years – with a key deposit that is returned at the end of the contract) price continues to rise higher. Market experts read the current development as part of the structural transition as the housing market is more and more led by actual housing demand, instead of speculation, and monthly renting gradually replaces the jeonse scheme. In this paper, we examine the current structural changes in Korea’s housing market, diagnose various phenomena that include surging jeonse price, and propose market-friendly policy responses. The housing market in Korea has been undergoing seismic changes since the global financial crisis. The shortage of housing supply has been relieved to an extent, and the expectations over rising home price have been severely depressed amid low-birth rate and aging population. This has affected many potential home buyers to opt to rent instead of buying. Between end-2008 and end-2014, the home ownership rate in Korea slid from 56.4% to 53.6%, while the rate of housing rent rose from 37.1% to 41.4%. More and more Koreans are seeing their home as a place for living, growing out of the longstanding desire to be a home owner. Changes are also taking place in the re


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Title Structural changes in Korea's rental housing market and market-friendly policy responses
Similar Titles
Material Type Article
Author(English)

Shyn, Yang-Sang

Publisher

[Seoul] : Korea Institute of Finance
Date 2015
Journal Title; Vol./Issue Korean Economic and Financial Review:
Pages 5
Subject Country South Korea(Asia and Pacific)
Language English
File Type Documents
Original Format pdf
Subject Economy < Economic System
Economy < Others
Holding Korea Institute of Finance
License