 Place-based policy and spillovers in the housing marketHayoung Kim Economics Letters, 2025, vol. 248, issue C Abstract: In response to soaring housing prices during the COVID-19 pandemic, some governments imposed bans on investor purchases in hot housing markets, raising concerns that such place-based regulations would shift investment demand to adjacent, non-regulated areas. This study examines a ban on rental-purpose purchases in South Korea and finds that the regulation leads to price declines in both regulated and adjacent areas, demonstrating a price spillover effect: an 8.9 % decrease in the regulated area and a 5.2 % decrease in adjacent areas. Moreover, there is no statistical evidence of demand displacement or increased transaction volumes in adjacent areas, while the investor ban is associated with a 25.6 % decline in transaction volumes within the regulated zone. These findings suggest that price spillover effects outweigh displacement effects in heated housing markets, indicating that place-based policies can effectively curb real estate price increases despite concerns about investment demand displacement. Keywords: Place-based policy; Displacement of demand; Price spillover; Housing market (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:248:y:2025:i:c:s0165176525000795 DOI: 10.1016/j.econlet.2025.112242 Access Statistics for this article Economics Letters is currently edited by Economics Letters Editorial Office More articles in Economics Letters from Elsevier |
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