Economic Analysis

Impact of Fed’s Decision on the Korean Real Estates Market

Abstract:

After the recovery from the Asian Financial Crisis of 1997, the economy of South Korea underwent structural change in investment, from the fixed capital formation of firms to the residential speculation of households. The trend became evident after the Global Financial Crisis of 2008, when both the market value of the real estates and borrowing rate dropped significantly. Now, in 2015, the Global Financial Crisis came to end, followed by the completion of the latest Quantitative Easing, and the hike in the Federal Funds Rate is impending. This paper examines the mechanism of which the Federal Fund Rate affects the Household Borrowing Rate in South Korea and how that will affect the Real Estate Market of South Korea, through understanding key characteristics unique in South Korea including types of borrowing rate, types of loans, tools of government regulation, and Jeonse, in order to formulate expectation about the future Real Estate Market in South Korea.

Macroeconomics Team 1

MIN, August, Hyeonjong (hminaa@stu.ust.hk)

KANG, Sally, Soyeon (sykang@connect.ust.hk)

Impact of Fed’s Decision on the Korean Real Estates Market

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