The Effects of Housing Policy on the Period of Home Ownership Using Survival Analysis

This study aimed to empirically analyze the effect of changes in policies of the capital gains tax and the comprehensive real estate tax on the period of home ownership for apartments in Seoul. The designation and cancellation of regulated areas could be a factor that determines the level of the capital gains tax and the comprehensive real estate tax imposed on homeowners and non-taxation requirements. Therefore, this study examined risks of selling housing in the regulated areas. The main analyses are as follows. First, the two tax policies had a contrary effect on the period of home ownership and they were likely to hold houses for a longer period of time if the capital gains tax was strengthened at the time of sale. The result suggested that an increase in transaction costs may lead to a choice for homeowners to hold off selling, which may have different effects from policy intentions such as a sharp decrease in transactions and a surge of housing prices. On the other hand, when the comprehensive real estate tax is strengthened, the probability of sale could rise due to an increase in the tax amount imposed by owning a house. Second, in the case of houses located in regulated or overheated speculation areas, the probability of sale decreased significantly. The capital gains tax had a greater and clearer effect than the comprehensive real estate tax, which means that the intensity of the two policies could lead to an imbalance in the housing market. In the end, policy implications should be made with clear purposes before their establishment.