| Title |
The Effect of Household Formation on Housing Price |
| Keywords |
Household Formation ; Housing Price ; Jeonsei ; Monthly Rent |
| Abstract |
The study of household formation is important for the real estate industry, because such demographic changes and patterns determine the level of demand for residential real estate. This paper investigates the effect of household formation on jeonsei price and housing rent. Most of empirical research on housing market in Korea have not been tested before in models and hence this study enriches the knowledge on the relationship of housing market and household formation and its consequent potential demand for rental and ownership housing units in terms of housing rent and jeonsei price. Parameter estimates reveal a considerable response of jeonsei price and monthly rent not only to general marriage rate but also other socio-economic variables. As a general marriage rate goes up, jeonsei and monthly rent increase. Analysis of housing market ignoring the endogeneity of household formation is thus potentially biased. |