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Housing prices and the role of speculation : The case of Seoul

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  • Housing prices and the role of speculation
  • Asian Development Bank
  • Asian Development Bank
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Title Housing prices and the role of speculation
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Sub Title

The case of Seoul

Material Type Reports
Author(Korean)

Asian Development Bank

Publisher

Asian Development Bank

Date 2009
Series Title; No Economics Working Papers
Subject Country South Korea(Asia and Pacific)
Language English
File Type Link
Subject Territorial Development < National Land Development
Holding Asian Development Bank
License

Abstract

Between June 1998 and March 2006, the price index of apartment housing in Seoul, Republic of Korea, more than doubled, while fundamentals such as gross domestic product, wage, and population increased by less than 35%. This study examines the role of a rational speculative bubble in this price surge. It finds that unobservable information explains part of the price volatility, and that a rational bubble proxy is a significant driver of prices. However, neither latent information nor rational bubble is enough to explain the recent housing price appreciation, even in conjunction with observable fundamentals.