A Study on the Factors of the Gap between Housing Demand and House Affordability

Purpose - The purpose of this study was to examine the main determinants of the gap between housing demand and house affordability. Design/methodology/approach - This study used the micro-level data of 60,043 households from Korea Housing-Finance Corporation by covering the period 2011 to 2022. Findings - First, the trend of general housing demand showed a higher figure in the future demand than in current demand. And such a tendency showed in all types of households, a relative young, low income, and single households. In the case of current housing demand, it has increased by 2022 from the beginning of 2013, while the future demand has rapidly increased from 2020. Second, although the house affordability showed a higher figure in current housing demand by 2019, its trend changed to be higher in future housing demand from 2020 by a rapid decreasing affordbility in current demand. In the case of young householders, the current house affordability was higher than that of future. The figure of low income householders was below 1 point in both periods, and house affordability of single householders showed a similar level in both periods. which showed over 1 point. Third, financial regulation on housing markets induced th widening of the gap between housing demand and house affordability, and such a trend is much atronger in the future(potential) gap of demand and affordability. More specifically, the strengthen financial regulation leaded to the widening of the gap in all types of households, a relative young, low income, and single households. Research implications or Originality - The effect of financial regulation is necessary to consider under the features of each households.