Abstract
In this study, we introduce a concise short-run equilibrium model for the housing market, covering sales and two distinct rental markets - monthly rent and Jeonsei markets. This model enables us to analyze the interplay among these markets and examine the determinants of equilibrium sales prices, monthly rent, and Jeonsei prices. Unlike monthly rent, the actual cost to a tenant in Jeonsei (interest on the Jeonsei deposit) depends on the tenant’s equity size, and the cost of ownership in Jeonsei differs from that in monthly rent. We incorporate these distinctions between monthly rent and Jeonsei contracts into our model and observe that the housing market's equilibrium is influenced by the type of rental market. We also examine the effects of an increase in real estate holding tax and find that sales prices decrease irrespective of the type of rental market. However, the impact on monthly rental fees and Jeonsei prices depends on the rental market structure: monthly rental fees do not change only if monthly rental is available, Jeonsei prices increase if only Jeonsei is available, and both monthly rental fees and Jeonsei prices increase if both types of rents are available.
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