Analyzing the short- and long-term effects of housing supply on jeonse price fluctuations and their spatial spillovers

This study empirically analyzes the impact of housing demolition and new completions on apartment rental prices across 25 districts in Seoul. To quantify the temporal and scale-dependent effects of supply shocks, panel regression, panel autoregressive distributed lag, and spatial econometric models were employed, allowing for a multidimensional assessment of the relationship between supply and rental prices. The results showed that demolition leads to short-term increases in rental prices, with stronger effects in large-scale cases. By contrast, new completions contribute to stabilizing rental prices in the long run, with the rental market adjusting relatively quickly to absorb supply shocks. Moreover, the analysis reveals that the effects of demolition and competitions are not confined to individual districts; rental price fluctuations in neighboring districts also influence local markets, indicating strong spatial interdependence across districts. These findings highlight the importance of policy responses beyond short-term measures, emphasizing the need for long-term housing supply strategies and spatially coordinated approaches to ensure market stability.