Table of Contents

Housing Markets and the Global Financial Crisis

Housing Markets and the Global Financial Crisis

The Uneven Impact on Households

Edited by Ray Forrest and Ngai-Ming Yip

Housing markets are at the centre of the recent global financial turmoil. In this well-researched study, a multidisciplinary group of leading analysts explores the impact of the crisis within, and between, countries.

Chapter 11: Housing Policy Issues in South Korea Since the Global Economic Crisis: Aspects of a Construction-Industry-Dependent Society

Soo-hyun Kim

Subjects: economics and finance, financial economics and regulation, geography, human geography, politics and public policy, public policy, social policy and sociology, comparative social policy, economics of social policy, sociology and sociological theory, urban and regional studies, urban studies

Extract

11. Housing policy issues in South Korea since the global economic crisis: aspects of a constructionindustry-dependent society Soo-hyun Kim INTRODUCTION The majority of Korean people believe that the Korean housing problem is the worst in the world. Almost daily, the press reports problems of high house prices vis-à-vis income, the potential rise or fall of house prices, and the unstable lease market. According to one survey, 58 per cent of Korean households (65 per cent in Seoul) have felt and still feel stress or anxiety due to a sharp rise in house prices (KBS, 17 January 2007). The previous government administration (2003–07), headed by President Roh Moo-hyun, was subject to harsh public criticism for its inability to control house prices (Hankyeoreh Newspaper, 10 January 2008), despite domestic increases being lower than those of most other advanced nations in the world. There are several reasons why Koreans are so sensitive about housing issues. First, real estate takes up 80 per cent of the total household assets; therefore one’s entire fortune depends on the fluctuations of house prices. Also, Korea has experienced periodic sudden rises in house prices during the rapid economic development and metropolitan concentration process since the 1960s, adding to the sensitivity. Moreover, the high dependence of the Korean economy on the construction and housing industry magnifies the influence of change in the housing market from the perspective of economic management. In such a situation, the Lehman Brothers collapse in 2008 also dealt a direct blow to the...

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