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Abstract
This study examined the relationship between housing markets and residential migration to identify if there is a housing refugee phenomenon due to an involuntary ripple effect in the Seoul metropolitan area, South Korea. The study applied Granger causality analysis and a vector error correction model. The empirical results confirmed that changes in housing market conditions cause a ripple effect in surrounding areas in the Seoul metropolitan area, and these changes are easily transmitted to the nearby Gyeonggi housing market. This study shows that intra-metropolitan residential migration may occur due to changes in housing market conditions. Additionally, the study proved that residential migration from Seoul to the nearby Gyeonggi province does not represent the pursuit of a stable residential environment, but is merely involuntary migration due to the financial burden of increased housing costs in Seoul. Finally, the study showed that there may be a ripple effect that intensifies instability in the jeonse market—a type of lease unique to South Korea—that emerged due to residential migration from Seoul. From this perspective, this study confirms that residential migration occurring in the Seoul metropolitan area is the result of an involuntary ripple effect and represents a housing refugee phenomenon.
Highlights
The housing market in South Korea is experiencing substantial change due to the economic downturn
This study reviewed whether residential migration in Seoul has a significant effect on the housing market of Gyeonggi province using Granger causality analysis and analyzed the factors affecting housing sales prices, jeonse prices, and residential migration in the metropolitan area using the vector autoregressive (VAR) model
This study used Granger causality analysis to find the relationship between residential migration and housing markets in the metropolitan area, the relationship between the housing markets of Seoul and Gyeonggi province, and the relationship between residential migration and demand–supply factors
Summary
The housing market in South Korea is experiencing substantial change due to the economic downturn. The most remarkable change is that a housing price trend that rapidly gathered stream in the 2000s has subsided, thereby reducing the possibility of capital gains from profit margins on purchases and sales. This change has shifted the direction of the South Korean housing market. As the usability of the jeonse deposit has decreased due to slow economic growth and low interest rates, the trend is shifting towards monthly rent (wolse in Korean), whereby the lessor can realize a higher profit than they would through bank interest
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