Theoretical Reflections on the Korean Housing System: Focusing on the 1960s to 1990s

Abstract

This paper theoretically explores the Korean housing system, mainly from the 1960s to the 1990s, focusing on housing system, housing market, housing finance, squatter settlements, low-income households, speculation, housing provision and allocation, public housing, housing-related saving schemes, redevelopment projects. The main differences between the Korean housing system and typical Western systems in terms of finance and delivery in the new housing market included the following. First, housing markets in Korea were clearly separated between the second-hand housing market and the new housing market. For second-hand housing, buyers and sellers relied on the market mechanism. The government’s intervention was mainly focused on new housing. Second, the most fundamental characteristic of the Korean housing system was that it was a self-sustaining system. All aspects of the provision of new housing, ranging from housing finance, construction, and delivery to consumption, were closely connected with each other. Through the evolution of the housing system in Korea, choices and the price mechanism were crucially distorted. Increasingly, first-time buyers were looking for new housing not based on their need or taste, but based on when and which houses gave them the greatest windfall gains.