3. Details of Data
4. The economic model
In order to analyze variables to affect the apartment price, we roughly divide the components to affect apartment price into two, which are the supply and demand side analyses. However, after investigation of the data, we figured out that demand side effect is much more influential to the apartment price. That is because even if there was large enough apartment supply for end user, apartment price was increased. Therefore we analyzed the reason that the apartment price has surged particularly in the demand side and found out economic implication. In aspect of demand, there are lots of economic variables to affect apartment price. We chose three standard variables of that many influential variables. And we recognized there was outstanding change before and after Asian financial crisis for us to experience. Therefore, after we divided the data into two parts; before and after Asian financial crisis, we examined how the variables affected apartment price.
There is a famous economic idiom among economists in Korea that is ‘No Failure in Real Estate Market,’ which was coined from 1970s. However, that idiom was getting familiar to the normal investors from the last government after Asian financial crisis. The idea made even single individual citizen be interested in the real estate market. In actually, the flow had got the power as time goes by, currently this idea is in the center of the economic controversy. Bunch of economists and people interested in economic situation published bunch of papers to trace back the core reason that makes particularly apartment price skyrocketed. Among the opinions, the leading ones are three, which are the shortage of supply, abundant liquidity, and speculative demand for apartment market. Even if there were controversial debates on the crucial reason, no one could apparently say the crucial reason with well explaining empirical data. That is why we started writing this paper to organize the crucial reason systematically.