Financialisation of housing in South Korea: State-sanctioned popular speculation on housing

Hwanhee Bae
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Hwanhee Bae: Department of Economics, SOAS University of London

No 263, Working Papers from Department of Economics, SOAS University of London, UK

Abstract: The South Korean economy has been rapidly financialising since the early 2000s. The housing market is the primary channel through which this shift in the structure of the economy has taken place. This paper sheds light on the widespread speculation on housing by households across income strata as financialisation became entrenched. Households join the race for short-term capital gains from an ever-growing asset bubble in the housing market, using easy access to loans. This process has been actively encouraged by the state. Two peculiar aspects of the Korean housing market characterise the financialisation of households, namely the pre-sale of apartments and the availability of deposit-only rental agreements. The two schemes enable extremely high-leverage investment and thus facilitate speculation by households. The state underpins the functioning of both schemes both directly and indirectly.

Keywords: financialisation; housing; Korea; real estate; household; asset-based; welfare; mortgage (search for similar items in EconPapers)
JEL-codes: D14 O18 P16 R31 (search for similar items in EconPapers)
Pages: 9861
Date: 2024-06
New Economics Papers: this item is included in nep-ure
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