An Analysis of Inter-regional Spillovers in Housing Price Movements*

This study analyzes the inter-regional spillover effects of the apartment sales market. The empirical analysis is conducted using connectedness network analysis, wavelet decomposition, and Granger causality test on monthly apartment sales price indices in Seoul (overall, Gangbuk, and Gangnam) and six regional metropolitan areas from January 1986 to December 2023. The main results of the empirical analysis are as follows. First, the synchronization of housing prices across regions has been strengthened during the early stages of the COVID-19 pandemic and 2022–2023 price fluctuations. Second, Seoul (overall, Gangnam, and Gangbuk) market acted as a strong information transmitter in the network, with Gangnam having the strongest influence. Daegu and Busan markets became information transmitters; Ulsan, Gwangju, and Incheon markets became information receivers; and Daejeon market became a relatively independent market. Third, while the effects of Seoul were only observed from the perspective of some local cities in the short run, there was a bidirectional causality between Seoul and local cities in the long run. These findings suggest that it is necessary to design housing market policies by distinguishing between the roles of information transmitters and receivers.