The real reason for rising housing prices? ”Excessive loans were the cause” = South Korea

A research institute's analysis has revealed that market liquidity (capital supply) and interest rates have had the greatest impact on housing price fluctuations in the capital region of South Korea over the past 20 years.
According to a report released on the 4th by the Korea Housing Industry Research Institute (JIRI), after analyzing the factors that affect home purchase and sale prices over the past 20 years, it was found that on a national basis, liquidity (M2 standard, relative
The factors with the greatest influence were, in order of magnitude, housing supply and demand (supply shortage, 0.38), interest rates (-0.35), and economic growth rate (0.15).
Looking specifically at the Tokyo metropolitan area, interest rates (-0.55), liquidity (0.54), and housing supply and demand (0.34)
The economic growth rate (0.14) was ranked in that order, and the influence of interest rates and liquidity was significantly greater than in regional areas. The Institute of Housing Research stated, "Housing prices in the capital region are relatively high, and there are many salaried workers, making it difficult for people to purchase homes.
The reason behind this is the high reliance on borrowing from banks at the time." Furthermore, the factors affecting housing prices change over time.
During the 10-year period from 2005 to 2014, liquidity (0.39) and housing supply and demand (0.32) were the main factors, and interest rates (0.12) had little influence.
For the period from 2019 to 2024, the main drivers were liquidity (0.62), interest rates (-0.57), and housing supply and demand (0.47), meaning that the influence of interest rates has increased significantly, by about five times, compared to the previous decade.
A Jyusanken official explained, "This is thought to be due to the rapid increase in the proportion of people purchasing their own homes using mortgage loans over the past decade."
In fact, the percentage of people who purchased their own home using home equity loans will increase from 35.7% in 2012 to 55.6% in 2022 nationwide.
In the metropolitan area, the rate rose from 44.2% during the same period to 62.5%. Kim Do-rae, head of the housing research lab at the Institute of Housing Science and Technology, said, "Based on the analysis results, it is necessary to stabilize housing prices.
"In order to achieve this, balancing supply and demand is paramount in the medium to long term. However, in the short term, proper management of liquidity and interest rates is also essential," he emphasized.