Impacts of demand and supply-side interventions on South Korea’s housing markets: a dynamic housing-CGE analysis

Euijune Kim (), Ayoung Kim () and Kyung-Min Nam ()
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Euijune Kim: Seoul National University
Ayoung Kim: Mississippi State University
Kyung-Min Nam: University of Hong Kong

The Annals of Regional Science, 2024, vol. 73, issue 1, No 14, 397-429

Abstract: Abstract This paper examines the impacts of housing market policies in Korea by developing a dynamic computable general equilibrium model integrating regional housing markets and multiregional mobility. We compare simulation outcomes of demand- and/or supply-side approaches in housing market interventions and address how these various policy instruments affect housing prices, demand, and household welfare. Policy simulation results suggest that supply-based interventions would be more effective than housing tax policies for cooling down overheated housing markets without decreasing consumer welfare. Tax-based demand-side approaches result in a 1.8–2.2% housing price drop and a 1.1–1.2% welfare decline annually between 2021 and 2024. In the supply-side policy, investing in housing construction leads to 3.4–4.1% lower housing prices and 1.5–1.8% enhanced welfare.

JEL-codes: D58 H21 O18 R31 (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1007/s00168-024-01274-1

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