Housing markets and government intervention in East Asian countries

Abstract

Housing has a number of distinctive characteristics, which means that the market does not work in the smooth functioning way that is claimed for other goods, and so produces neither an optimal level of output, nor an equitable distribution of that output. The rationale for government intervention in the housing market in many countries has generated a lengthy debate on the relationships between economic and political structures, and the established housing system. If so, how have governments played their role in the housing market? And more specifically, why does the state intervene? In this study, we focus on Confucian states, including China, Japan, South Korea, Hong Kong, and Taiwan. Government intervention in the housing market is mainly due to the minimal ‘bottom up’ practice of the housing policy tradition in most East Asian countries. We could see some convergence, as the East Asian countries move towards a property-owning model, by addressing the new forms of inequality generated by the emphasis on an individual homeownership-biased housing policy, and government intervention.

Keywords:

• housing policy
• housing market
• government intervention
• East Asian countries
• homeownership

Notes

Confucianism is often characterized as a system of social and ethical philosophy rather than a religion. In fact, Confucianism is built on an ancient religious foundation, to establish the social values, institutions, and transcendent ideals of traditional Chinese society.

The HLC mainly provides individuals with a long-term, fixed-low-interest loan for the building, and acquisition of their own home (HLC Act of 1951).

The ceiling price system was first confined in 1977, to apartment units constructed by the public sector of 85 square metres in size or less, and was then extended in 1978, to private-sector apartments. The extension of the ceiling price system increased effective demand, resulting in the explosive housing boom of 1978.

Korean economic growth stagnated and an International Monetary Fund (IMF) bailout was required in 1997. The impact of the crisis on the economy was severe. The won has depreciated dramatically. Many workers lost their jobs, and the number of homeless increased. The standard of living has declined substantially, and the situation portends a more difficult life for the majority of the population for years to come. The economic contraction has affected the lives of the poor in many areas: falling incomes, rising absolute poverty, and malnutrition, declining public services, threats to educational and health status, increased pressure on women, and social tension.

A hukou is a record in the system of household registration required by law in the People's Republic of China The system itself is more properly called ‘huji’, and has its origins in ancient China. A household registration record officially identifies a person as a resident of an area, and includes identifying information, such as name, parents, spouse, and date of birth.