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Geodemographics and Urban Planning Analysis: An Historical Review Read chapter Read first chapter

2022 | OriginalPaper | Chapter

12. Government Intervention in Real Estate Market: Is Tax Reform Effective in Seoul Housing Market?

Authors : Euijune Kim, Ayoung Kim, Inseok Moon

Published in: Theory and History in Regional Perspective

Publisher: Springer Nature Singapore

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Abstract

This paper develops a dynamic economic analysis of fiscal housing policy effects on the housing market in Korea. The analytical framework integrates a standard Computable General Equilibrium (CGE) model with a housing market model. The housing model accounts for housing demand, investment, user costs, and multiregional migration. The market is disaggregated into four major regions; three regions (Seoul, Inchon, and Gyeonggi) in the Seoul Metropolitan Area and the rest of Korea to incorporate the regional heterogeneity in housing stocks. The policy simulations using the CGE model show that it would be more effective to increase the property tax rate than the acquisition tax to stabilize housing prices with a moderate increase in housing demand.

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Footnotes
1
In 2018, 77.8% of total net worth in the Korean household was non-financial assets of which real estate makes up the vast majority of such assets (http://​kostat.​go.​kr/​portal/​eng/​pressReleases/​1/​index.​board?​bmode=​read&​aSeq=​376338, accessed on February 19, 2021).
 
3
The CRET originally was designed with an exemption level at KRW 600 million, but the Korean government lowered the level to KRW 300 million in 2018.
 
4
This is derived from the housing sales price index by KB bank (2003.06–2013.06), and the average duration of homeownership is 10 years.
 
5
The range is appropriate because the upper and lower limits of the parameter are 10% of the average value in Belgodere and Vellutini (2011).
 
6
The model cannot deal with housing consumption behavior by household by income class or property size since the housing CGE model is not classified in terms of property value, the number of privately owned housing units, the holding period, and the geographical location within regions due to limitations on data availability for these housing statistics.
 
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Metadata
Title
Government Intervention in Real Estate Market: Is Tax Reform Effective in Seoul Housing Market?
Authors
Euijune Kim
Ayoung Kim
Inseok Moon
Copyright Year
2022
Publisher
Springer Nature Singapore
Book
Theory and History in Regional Perspective

Print ISBN: 978-981-16-6694-0

Electronic ISBN: 978-981-16-6695-7

Copyright Year: 2022

DOI
https://doi.org/10.1007/978-981-16-6695-7_12