• Journal of the Korean housing association
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• v.26 no.3
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• pp.45-54
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• 2015

The purpose of this research is to analyze the wealth effects of home-owning baby-boomers on household consumption on non-durable goods in the Seoul Metropolitan Area. In so doing, this empirical study utilized the Korean Labor and Income Panel Study (KLIPS) of 2002 and 2012. The statistical findings reveal that household wealth in the period had sharply risen in household income, asset, debt and consumption, and the substantial increase came from growing income and consumption embedded into an expansionary stage of the family life cycle. Further, housing wealth had a much greater effect on consumption expenditure than did financial asset in 2012 while financial wealth effect was larger than housing wealth effect in 2002. Housing wealth effects had become far stronger as the age of the baby-boomer householders increased. As the baby-boomers are close to the retirement stage, post-retirement income security becomes of concern, so that the wealth effect of real estate income as an income alternative for retirees is explicit. The results imply that retirement of baby-boomers is likely to reduce consumer spending, aggravating slowdown of the real economy. Thus, diversification of household asset portfolio in a pre-retirement period is of great significance in maintaining adequate household consumption in later life.

• KDI Journal of Economic Policy
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• v.30 no.2
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• pp.1-26
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• 2008

This paper attempts to re-evaluate the size of housing wealth effect in Korea. Our focus is on the size of 'genuine' housing wealth effect, i.e., the response of consumption spending by home-owners to the changes in housing wealth. Two issues show up while we estimate the 'genuine' wealth effects using aggregate time series data: the issues around home ownership and proper measure of consumption. We first argue that it is more appropriate to use non-housing consumption, because housing consumption is in large part not of the choice of home owners but the imputed rents they do not actually choose to pay. We then proceed to address the issue of home ownership, by examining how much to revise the estimates of housing wealth effect obtained from aggregate non-housing consumption data. We construct two structural models and estimate the share of home-owners' consumption in those models' context. It is found that, if properly revised in light of the estimated consumption shares of home-owners, the magnitude of resulting housing wealth effects are larger than what simple time series regressions imply.

• Journal of the Korean housing association
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• v.28 no.1
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• pp.83-93
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• 2017

This research intends to find out the impact of housing wealth of home-owning pre-retirees and older adults consisting of young-old, middle-old and old-old groups on their household consumption. In doing so, this research analyzes 2,350 home-owning households by utilizing the 17th Korean Labour and Income Panel Study (KLIPS). The results show that housing wealth has a statistically significant effect on non-durable consumption of the pre-retirees, and young-old and middle-old groups of older adults, and housing wealth has a much stronger effect on household expenditure than does financial wealth or real estate. It's found that the consumption elasticity is particularly greater for female-headed households living in SMA, residing in apartments, holding a lower debt-to-asset ratio and being a pensioner. The empirical findings imply that the old-old group of older adults is unlikely to actively tap into their housing windfalls since housing asset becomes the last to dispose in the course of an individual's life. As housing wealth effects are especially strong when liquidity constraints faced by older adults are removed, it's of significance to substantially reduce household debt before retirement in order to constantly maintain an adequate level of household consumption or to promptly prepare for future contingencies.

• Journal of the Economic Geographical Society of Korea
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• v.15 no.4
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• pp.534-549
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• 2012

This study analyzed the effects of housing wealth on the balance accounts of elderly households with an age of over 60 facing the asset decumulation period, capitalizing upon an ordered logit model for the 2011 household finance survey data. Out of some variables representing personal and social characteristics, the age and waged worker variables had a positive effect, but the number of household, low education level, living in the apartment and capital region variables negatively affected the balance accounts of elderly households. Some variables reflecting economic wealth and financial strategies such as the attitude of risk-taking, ordinary income and the ratio of financial assets had a positive impact, but other variables such as DSR did a negative one on the balance accounts of the elderly households. The ownership of housing wealth variable positively, but the ratio of housing assets variable negatively affected the balance accounts of the elderly households, which could be derived from the duality of housing as both consumption goods and assets. However, the ownership of other real estates and the ratio of them in the total assets variables had a negative impact on the balance accounts of the elderly households. Furthermore, since the financial asset-debt ratio worsened the balance accounts of the elderly households with both housing and other real estates, it is implied that the purchase of real estates with excessive bank loans could make them dangerous.

• Land and Housing Review
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• v.13 no.1
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• pp.55-65
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• 2022

This paper investigates the distinct characteristics of freehold and leasehold households living in the seven largest cities and the other areas. We employ the two-stage logit regression analysis to identify the marginal effects of wealth and income after controlling for the other one. We document the following results. First, households with more net wealth are more likely to reside in their own houses, regardless of living areas. Second, the pure income effect after controlling for wealth and other variables lowers the tendency of freeholders to live in the seven largest cities while increasing the tendency to live in the other areas. Furthermore, the income effects reduce the tendency to live in the former regions. Our results suggest that the pure income effects enhance preferences for a better living environment (e.g., larger spaces, better school districts, etc.), whereas the wealth effect increases the likelihood of freeholds.

• Korean System Dynamics Review
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• v.12 no.2
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• pp.5-36
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• 2011

Seoul citizens are currently suffering from high housing price. Home prices have risen more rapidly than salaries so owning a housing unit (apartment, condominium, or single-family home) in Seoul is becoming more difficult than ever. Therefore, this research examines the behavior of average Seoul citizen in owning housing unit in Seoul, Korea, particularly in terms of the length of time required to afford a house unit. This research estimates that it will take about 18.75 years in maximum after getting a job (12.75 years after purchasing the housing unit) to own housing unit in Seoul that is currently valued at $300,000 where the growth rate of income is 2.97% and consumption price increases at a rate of 2.95% per annum. Finally in this research, the optimal growth rate of housing price is estimated ranged from 3.5 to 4.0% minimizing the loan payoff period.

• KDI Journal of Economic Policy
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• v.32 no.4
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• pp.35-73
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• 2010

This paper examines consumption dynamics in relation to asset prices in Korea. Empirical analysis based on the error correction model shows that personal consumption is affected by changes in asset prices but the consumption converges to the long-run level of consumption corresponding to the total income flow in two years. This adjustment in consumption implies that the consumption error, reflected in the error correction term, should have predictability for the future consumption growth during the adjustment period. It is found that the error correction term has a long-run predictability for consumption over up to about 3 years; thus, confirming the error correction model. It is also found that housing prices have larger effects on consumption compared with stock prices in Korea. In addition, the effects of income and asset prices on consumption show bigger effects during contractionary period than expansionary period in business cycles. This paper also analyzes effects of asset wealth that reflects changes in both price and quantity. It is found that asset wealth has a long-run effect on consumption in addition to total income as determinants of consumption. Since wealth effects usually indicate the long-run effect of changes in asset wealth on consumption that is not explained by labor income, which is the proxy for human source of wealth, it is estimated with labor income used as a control variable. According to the estimation, the marginal propencity to consume out of asset wealth is approximately 2%. It means that 1,000won increase in asset wealth may lead to 20 won increase in consumption.

• Korean Institute of Interior Design Journal
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• v.17 no.3
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• pp.23-33
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• 2008

After the concept of apartments was introduced in 1960s in Korea, on account of the development of architectural technology and science, high-rise residences in Korea are getting higher, and these residences have been becoming high-rise commercial/residential buildings since 1990. Nowadays, as the construction of high-rise commercial residential building complex is booming, the difference between these complex and high-rise apartments is getting smaller, and these two kind of high-rise residences are becoming new residential style in Korea. And these high-rise residences are considered the symbol of wealth owing to the marketing strategy emphasizing high quality, refined interior, a fair view, and the protection of privacy. However, high-rise residences bring about many problems related to health and psychology caused by the consumption of a large amount of energy, pollutant emission, the deterioration of the quality of indoor air, and vibration. For this reason, in this study, we tried to emphasize the necessity of environment-friendly access to provide healthy living environment and to reduce the negative effect of housing life in high-rise residences, and find the method to improve environment-friendly quality and health of residents in interior space. Therefore, this study aims to detect the problems and the items to be improved of interior spaces of high-rise residences by quantitative, qualitative analysis of the evaluation elements and the floor planning elements deduced from environment-friendly architectural certification in Korea and the other countries, and suggest the guideline to improve the environment-friendly quality of these interior spaces.