Abstract
Based on the finance panel data of the Korea Institute of Public Finance, this study investigates the effects of household debts and tax burdens on housing purchase decision. The results of this study shows that as household debts increases, housing purchase decision becomes strengthened while as related tax burdens increases, the decision becomes weakened. The former result implies that household debts can be generally regarded as accrued in order to purchase houses with the expectation of rising future housing prices. The latter result implies that the capitalization effect, reduced housing demand due to related future tax burdens in acquisition and holding phases, has an important effect on housing purchase decision. Furthermore, several households’ subjective recognition factors are shown to have incremental effect on those causalities.
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