The impact of public rental housing projects on neighborhood housing markets in Korea

Abstract

After the Korean government initiated the provision of the permanent public rental housing in 1989, there has been a variety of policy measures to provide decent housing for low-income households. As of 2009, the ratio of the public rental housing to the total housing became 4.8 percent. It is widely agreed that the nation needs to build more public housing and to target a wider range of the types of households. However, the expansion of such development projects has resulted in worries and oppositions in the impacted neighborhoods, which have insisted that such developments bring about negative impacts on the adjacent neighborhoods. This study explores the impact of recently developed public rental housing (“Kukmin” rental housing) on the nearby housing markets. The paper adopts a quasi-experimental design to deal with the possible endogeneity for the construction of public rental housing by adopting an extended treatment to the canonical difference-in-difference method. This research finds that the public housing projects increase the value of surrounding properties.