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Korea n real estate market and boosting policies: Focusing on mortgage loans

    Sungjoo Hwang Affiliation
    ; Moonseo Park Affiliation
    ; Hyun-Soo Lee Affiliation
    ; Yousang Yoon Affiliation
    ; Bo-Sik Son Affiliation

Abstract

The Korean real estate market is currently slowing down due to the global economic crisis, which resulted from subprime mortgage crisis in the United States. In response, the Korean government has adopted various policies in an attempt to deregulate real estate speculation. For example, the Loan to value ratio (LTV) has been increased in order to stimulate housing supply, demand, and housing transactions. However, these policies could potentially result in a mortgage crisis due to an increase in over‐amplified and high‐risk derivatives in Korea's secondary mortgage market. Consequently, the housing market could fall into such deep confusion that it will be even more difficult to perform empirically based housing market forecasting. Therefore, a comprehensive and systematic method is required to analyze the real estate financial market and the causal relationships between market influence factors. With an integrated perspective and an application of a system dynamics methodology, this paper proposes Korean Real Estate and Mortgage Market dynamics models based on the fundamental principles and causal loops of housing markets, which are determined by the economic activities of consumers, financial agencies, and real estate financing investors. The potential effects of the Korean government's deregulation policies are also considered by focusing on the main factor of these policies: the mortgage loan.


Santruka


Korejos nekilnojamojo turto rinka šiuo metu išgyvena nuosmuki del pasaulines ekonomines krizes, kuri kilo del JAV būsto paskolu rinkos krizes. Reaguodama i tai, Korejos Vyriausybe emesi ivairiu politikos priemoniu, siekdama užkirsti kelia nekilnojamojo turto spekuliacijai. Pavyzdžiui, buvo padidintas paskolos ir vertes santykis (angl. LTV), siekiant skatinti būsto pasiūla, paklausa ir būsto sandorius. Tačiau šios politicos priemones galetu lemti būsto krize del per daug išplestos ir dideles rizikos išvestinemis priemonemis, didinant Korejos antrinio būsto rinka. Tačiau būsto rinka gali atsidurti tokioje painioje situacijoje, kad bus dar sunkiau atlikti empiriškai pagrista būsto rinkos prognoze. Todel reikalingas išsamus ir sisteminis metodas, padedantis analizuoti finansine nekilnojamojo turto rinka ir priežastini ryši tarp rinka veikiančiu veiksniu. Be integruotos perspektyvos ir dinamiško sistemingu metodu taikymo, šiame straipsnyje siūlomi Korejos nekilnojamojo turto ir paskolu rinkos dinamikos modeliai, pagristi pagrindiniais principais ir pagrindinemis nesekmemis būsto rinkose, kurios nustatomos pagal ekonomine vartotoju veikla, finansuojančias institucijas, ir nekilnojamaji turta finansuojančiais investuotojais. Galimas Korejos Vyriausybes pertvarkymo politicos rezultatas ‐ sutelkti demesi i svarbiausia šiu politikos krypčiu rodikli ‐ būsto paskolas.


First Published Online: 09 Jun 2011

Keyword : System dynamics, Real estate market, Mortgage loan, LTV

How to Cite
Hwang, S., Park, M., Lee, H.-S., Yoon, Y., & Son, B.-S. (2010). Korea n real estate market and boosting policies: Focusing on mortgage loans. International Journal of Strategic Property Management, 14(2), 157-172. https://doi.org/10.3846/ijspm.2010.12
Published in Issue
Jun 30, 2010
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