188宝金博页面版

sustainabilityArticleThe Ef f ects of Regional House Prices on Consumptionin Korea: Heterogeneous Behaviors According toHomeownership Status and Lifecycle StageJong Chil Son1and Hail Park2, *1Division of Economics, Hankuk University of Foreign Studies, Seoul 02450, Korea; jcson@hufs.ac.kr2Department of International Business and Trade, Kyung Hee University, Seoul 02447, Korea* Correspondence: hailpark@khu.ac.kr; Tel.: +82-2-961-2170Received: 10 March 2020; Accepted: 21 April 2020; Published: 25 April 2020????????? ????????Abstract: This paper investigates the ef f ects of regional house prices on consumption growth, with afocus on heterogeneity across homeownership statuses and lifecycle stages, using household-levelpanel data in Korea from 2004 to 2017. The empirical estimation results indicate, f i rstly, that thegrowth of regional house prices has overall positive ef f ects on consumption growth in the full sampleincluding homeowners and renters. Secondly, house prices have signif i cant and large ef f ects onconsumption growth for homeowners, while the ef f ects are sharply reversed for renters, being weaklynegative. Thirdly, the sensitivity of homeowners’ consumption in response to house prices dif f ersacross dif f erent stages of the lifecycle. The consumption sensitivity is greatest in the old age cohortfor the sample covering the owners of single and multiple homes. When using a subsample of onlysingle homeowners, however, the young cohort turns out to have the highest sensitivity, implying thatyoung single homeowners face high borrowing constraints and expected income volatility. Finally,renters’ consumption sensitivity in response to house prices becomes more negative over the lifecycle.Keywords: house prices; consumption; homeownership; renter; household panel; f i xed ef f ect1. IntroductionHouse prices can be crucial to the real economy from two perspectives. They can af f ect the realeconomy through the household consumption channel. Additionally, they can be deeply correlatedwithhouseholddebts, whichcanbebenef i cialforresourceallocationovertimeforliquidity-constrainedhouseholds. The debt overhang, however, can weaken f i nancial stability and subsequently hamper thereal economy. For the relationship between house prices and consumption, the wealth and substitutionef f ects entail a positive impact of house prices on consumption, while the income ef f ect has a negativeimpact, as discussed by [ 1 – 3 ]. Thus, the total ef f ect could be determined by the relative magnitudesof these three ef f ects. Figure 1 shows the growth rates of real housing prices and real householdconsumption, and the growth rates of real housing prices and household debt as aggregate variablesin Korea, respectively. The degree of co-movement between real housing prices and real householdconsumption appears to be low. The correlation coef f i cient between the real housing price growth rateand real household consumption growth rate was 0.19, and the correlation coef f i cient between the realhousing price growth rate and household debt growth rate was 0.48.The empirical literature analyzing the relationship between house prices and householdconsumption reports that the elasticities of household consumption in response to house pricesrange from 0.1% to 0.6% for a 1% increase in housing prices [ 2 , 4 – 7 ]. In addition, some previous studiesusing micro data for the Korean case, such as [ 8 – 10 ], investigate the ef f ects of the valuation of the realassets of homeowners on consumption. The reported elasticities range from 0.1% to 0.2%, showingrelatively weak wealth ef f ects compared to those from the international evidence.Sustainability 2020, 12, 3517; doi:10.3390/su12093517 www.mdpi.com/journal/sustainability