"Increased Media Coverage on Apartment Price Rise Correlates with Housing Market Instability"

[Image source=Yonhap News]

A study by a national research institute found that as media coverage of record-high apartment prices increases, more people anticipate rising housing prices, further destabilizing the housing market. Critics point out that the government is blaming the media rather than policy failures for the rise in apartment prices in Seoul.

According to the real estate industry on the 2nd, the Korea Research Institute for Human Settlements released these findings in a working paper titled "A Behavioral Economic Understanding of Housing Transaction Price Determination."

The report analyzed the impact of average prices, highest prices, whether the highest price was broken, total transaction volume, and the number of media reports related to record-high prices on housing price increases.

The report explained that in Seoul, an increase in media coverage about changes in the highest prices and record-breaking highest prices tended to raise the proportion of people expecting future price increases.

Research Fellow Jo Jeong-hee stated, "This effect has become stronger since 2017," adding, "The impact of extreme transaction behavior, such as record-high prices, is greater in Seoul than nationwide, and the influence of related media coverage and information is also relatively larger."

He further pointed out that expectations about price changes can significantly affect housing market instability, and if psychological herding occurs after price increases, it could trigger even greater price rises.

In other words, increased media coverage of rising housing prices can heighten market expectations of price increases, which may lead to irrational overheating that causes further price hikes.

While it was confirmed that media coverage influences people's expected prices and transaction behaviors regarding apartments, the specific effects varied by region and time period.

The report noted, "In markets with limited supply, such as real estate, current market prices may be determined not by the average expected price of the entire market but by those with extremely high expectations."

This content was produced with the assistance of AI translation services.