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Financialisation of housing in South Korea: State-sanctioned popular speculation on housing

Author

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  • Hwanhee Bae

    (Department of Economics, SOAS University of London)

Abstract

The South Korean economy has been rapidly financialising since the early 2000s. The housing market is the primary channel through which this shift in the structure of the economy has taken place. This paper sheds light on the widespread speculation on housing by households across income strata as financialisation became entrenched. Households join the race for short-term capital gains from an ever-growing asset bubble in the housing market, using easy access to loans. This process has been actively encouraged by the state. Two peculiar aspects of the Korean housing market characterise the financialisation of households, namely the pre-sale of apartments and the availability of deposit-only rental agreements. The two schemes enable extremely high-leverage investment and thus facilitate speculation by households. The state underpins the functioning of both schemes both directly and indirectly.

Suggested Citation

  • Hwanhee Bae, 2024. "Financialisation of housing in South Korea: State-sanctioned popular speculation on housing," Working Papers 263, Department of Economics, SOAS University of London, UK.
    • Handle: RePEc:soa:wpaper:263
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    File URL: https://www.soas.ac.uk/sites/default/files/2024-06/economics-wp263.pdf
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    More about this item

    Keywords

    financialisation; housing; Korea; real estate; household; asset-based; welfare; mortgage;
    All these keywords.

    JEL classification:

    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • P16 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Capitalist Institutions; Welfare State
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure

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