Korean Housing Market and Its Improvement Measures
Dept. Middle East-Africa Studies
Study of Economics
Prof. Hanneul Earl, Han
December 17, 2012
Korean housing market and its improvement measures
Housing policy of government is very important because this is directly related to fundamental settlement of deficient housing, maintaining of stable base of housing market, and improvement of residence level for national people. Specifically, its importance is in constructing stable base of housing market such as that problem of deficient housing should be settled fundamentally through continuous supply of housing fit to variable demand according to regional situation of housing market and income level; house price should be stable through proper demand management such as refraining speculation demand for housing and excessive consumption for housing etc. Basic tone for recent housing policy by government has concentrated the efforts on increase of purchasing power for housing through financial and tax support, measures of stable residence for ordinary people according to increase of lease price and change to monthly rent, and supply of small house against increase of housing price. But it is true that basic direction of housing policy is generally desirable but substantial benefit is poor. Most of housing policy place too much importance on new house built for sale and focus on financing support so that benefit for low income class who do not have refund capacity is poor. There is also a problem that it is necessary to expand construction of public rental housing but actual benefit is possible after completion of construction.
The problems of housing policy are as follows. First, inefficiency of housing production. Due to high capital cost, underdeveloped housing finance system makes housing production depend upon speculation or economic situation. And due to inefficient production structure, price elasticity of input, and price elasticity and elasticity of substitution between input elements are very low.
Study of Economics
Prof. Hanneul Earl, Han
December 17, 2012
Korean housing market and its improvement measures
Housing policy of government is very important because this is directly related to fundamental settlement of deficient housing, maintaining of stable base of housing market, and improvement of residence level for national people. Specifically, its importance is in constructing stable base of housing market such as that problem of deficient housing should be settled fundamentally through continuous supply of housing fit to variable demand according to regional situation of housing market and income level; house price should be stable through proper demand management such as refraining speculation demand for housing and excessive consumption for housing etc. Basic tone for recent housing policy by government has concentrated the efforts on increase of purchasing power for housing through financial and tax support, measures of stable residence for ordinary people according to increase of lease price and change to monthly rent, and supply of small house against increase of housing price. But it is true that basic direction of housing policy is generally desirable but substantial benefit is poor. Most of housing policy place too much importance on new house built for sale and focus on financing support so that benefit for low income class who do not have refund capacity is poor. There is also a problem that it is necessary to expand construction of public rental housing but actual benefit is possible after completion of construction.
The problems of housing policy are as follows. First, inefficiency of housing production. Due to high capital cost, underdeveloped housing finance system makes housing production depend upon speculation or economic situation. And due to inefficient production structure, price elasticity of input, and price elasticity and elasticity of substitution between input elements are very low.