The decline in demand for real estate buying and selling, which was caused by continuous economic recession after the financial crisis, has caused the phenomenon of sudden rise in the house leasing price. After interlocking with the basis of low interest and government policies that aim at vitalizing real estate transactions, some of those who are in the market for the house lease are turning towards purchasing real estates instead, and the auction market is becoming invigorated as the demand by consumers who wish to purchase real estates at lower prices is accelerating their entrance into the apartment auction market. In addition, the development of financial markets and the arrival of the globalization of finance have accelerated the combination of the capital market and real estate market, and the movements in the capital market, such as macroeconomic variables, are now affecting the real estate market in today''s era. Based on such perceptions, this study aimed to establish the apartment auction sales price percentage determination model, deduct variables that determine apartment auction sales prices, and analyze the effects. Since the input variables of the apartment auction sales price percentage determination model that has been established in this study have time sequential fluctuations, Vector Error Correction Model (VECM), which is typically used for the factor analysis of multiple time series data, was utilized.
The impulse response analysis results showed that the increase in the gross domestic product, interest rate and consumer price index elevated the apartment auction sales price percentage, and that the increase in housing supply results decreased the apartment auction sales price percentage. Also, the composite price index of stocks and housing transaction price index showed negative effects. The results of the variance decomposition results for the forecast error do not deviate greatly from the results of the impulse response analysis results. The analysis showed that the explanation power of the apartment auction sales price percentage''s own variables was high across the entire period, but the explanation power decreased as the time deviation increased, which meant that other variables'' explanation power for the fluctuations in the apartment auction sales price percentage increased, as time deviation increased. Among input variables, factors that affected fluctuations in the apartment auction sales price percentage were housing supply results, consumer price index and interest rates, and the explanation power of the housing supply results was the highest, followed by the consumer price index, interest rates and composite price index of stocks. However, other factors, which are the gross domestic product, composite leading indicator and housing transaction price index, displayed extremely low explanation power for the fluctuations in the apartment auction sales price percentage.
Implications from this study''s findings that can be suggested from the point of the apartment auction market''s vitalization and investment are as follows.
First, it was confirmed that the apartment auction market responds considerably to the new apartment distribution market, which shows the housing supply results. Therefore, on the basis of the Ministry of Transportation''s housing approval and permission results data, the expansion of the new apartment distribution market becomes the factor that lowers the apartment auction sales price percentage, and it should be considered as an important factor when making investment decisions for the real estate auction market.
Second, real estate has traditionally been recognized as an investment good that hedges inflation, and the analysis showed that real estate responds sensitively to inflation. Therefore, the forecasting of the increase in the consumer price should become the object of basis and consideration for logical investment decision making.
Third, real estate is a costly investment good, and the perception of wanting to maximize the profit by using one''s equity capital and financial leverage is dominant when acquiring a property. Therefore, when interest rates increase, collaterals of debtors who cannot handle financial debt become insolvent, and this increases the number of auction items. The increase of auction items raises the apartment auction sales price percentage, so the forecasting of interest rates should become the object of basis and consideration for logical investment decision making.
Fourth, it was shown that the gross domestic product invigorates direct investment into the real estate market, and gradually influences the apartment auction market in a positive manner. However, Korea has now entered into a stable economic growth after completing rapid growths of the past, and the supply and demand are now in an equilibrium to a certain extent after the going through steady supply, which was provided to resolve the issue of imbalance, which was caused by the real estate market''s chronic issue of excess demand, and this has stabilized real estate prices. Also, as we enter the era of low interest rates, the phenomenon of preferring investment goods that provide high profits is being shown in order to make up for the lowered rate of return provided by the financial market. Therefore, it is expected that if the gross domestic product increases, the movement of capital into the apartment auction market, which can hedge inflation, will accelerate and vitalize the auction market.
Even though the results derived showed that the indicators such as the composite leading indicator, composite price index of stocks and housing transaction price index are not factors that greatly influence the apartment auction sales price percentage, further studies are necessary since such variables can possible affect the apartment auction market.