The Role of Chonsei as a Price Protector in the Korean Housing Market

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In this study, we investigate whether ‘Chonsei,’ the distinctive type of housing contract system in Korea, has a favorable impact on house prices during a market downturn. We show the mechanism in which Chonsei prevents a sharp drop in house prices based on sellers’ loss aversion behavior. Moreover, using data on the Seoul condominium (i.e. apartment) market during the 2006–2017 period, we find that Chonsei prices have a negative impact on the housing trade volume in a market recession. This finding is consistent with our argument that loss aversion behavior appears with regard to the rise in Chonsei prices and thereby Chonsei functions as a price protector in the Korean housing market. © 2019, © 2019 Korea International Economic Association.
Publisher
Routledge
Issue Date
2019-01
Language
English
Citation

International Economic Journal, v.33, no.1, pp.27 - 41

ISSN
1016-8737
DOI
10.1080/10168737.2019.1570300
URI
http://hdl.handle.net/10203/262001
Appears in Collection
MT-Journal Papers(저널논문)
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