[2019-08]

Can government stabilize the housing market? Evidence from South Korea

Jang, Hanwool
Moon Soul Graduate School of Future Strategy, KAIST

Song, Yena
Department of Geography, Chonnam National University

Ahn, Kwangwon
Moon Soul Graduate School of Future Strategy, KAIST

ABSTRACT
This study aims to examine the effectiveness of government policies in stabilizing the housing
market in South Korea. Analysis of condominium prices during 2012 and 2019 in conjunction with housing policy and regime changes reveals the following: 1) housing policies effectively restrained the rapid increase of housing prices; 2) market efficiency was also improved; and 3) finally, housing prices approached close to long-run equilibrium. Our findings strongly suggest that government policies can be effective tools to stabilize housing prices, as well as improve market conditions.

Keywords: Housing Policy, Bubble, Long Run Equilibrium, Market Efficiency