The Impact of Each Stage in the Apartment Reconstruction Process on Apartment Prices: Seoul Cases

This study empirically examines the impact of each different stages in the apartment reconstruction process on apartment prices in Seoul. Using transaction data from 2006 to 2023, the study employs Hausman-Taylor(HT) models to reveal the distinct effects of each reconstruction stage on price fluctuations. The findings indicate that the initial stages, characterized by development potential, led to price increases due to positive market expectations. However, in the intermediate stages, such as the establishment of the Reconstruction Partnership Establishment Promotion Committee and Deliberation on Construction, price declines were observed due to uncertainties and profit taking sales behavior. In the later stages, while Management Disposal Plan approvals initially caused price increases due to heightened project visibility, significant price decreases followed after its completion as expectations were adjusted downward. The residents migration and construction phases showed limited market reactions. This research provides a comprehensive analysis of the mechanisms underlying price fluctuations across reconstruction stages, offering valuable insights for investors and policy-makers. Specifically, the study highlights the necessity of understanding and addressing stage-specific market risks and opportunities when formulating investment strategies or policies. Future research on ownership changing transaction for profit taking during the reconstruction process, will provide a deeper understanding of the reconstruction investment dynamics.