Effects of housing policies on housing prices in Korea

This paper examines real estate policies in South Korea and analyzes their effects on housing prices through impulse response function analysis. This study uses the analytic hierarchy process method to measure the weighted value and the vector autoregressive model for impulse response function analysis. The results of this study show that "the relief measures on housing construction regulations," which took effect on November 12, 1988, had the highest degree of strength for housing prices increase, whereas "the real estate policy reform" announced in August 31, 2005 had the strongest influence on housing price decrease. In addition, the impulse response function analysis represents that the "two million new units construction plan on September 1998" had the longest impulse response with a duration of thirty months. However, most real estate policies showed no signs of impulse response. Consequently, this paper proves that real estate policies have had little or no effect on stabilization of housing prices.