A Study of the Surplus Funds of the NHUF Considering the Common Factor in Korea

This study estimates the minimum level of surplus funds that the National Housing and Urban Fund (NHUF) should maintain to prepare for economic shocks and potential housing market collapses triggered by abnormal macroeconomic conditions or temporary mass withdrawals of subscription savings. As the first systematic analysis of surplus funds requirements for the NHUF, this research evaluates both normal and abnormal economic scenarios using single-index and Bayesian VAR models that incorporate housing market cycles. The results indicate that the NHUF should retain a minimum surplus of $35.2–41.9 billion under normal conditions and $41.2–73.7 billion under abnormal economic conditions. These findings underscore the necessity of introducing a 'minimum surplus funds' concept to mitigate sudden withdrawal risks, especially considering that 54% of the NHUF's funding relies on subscription savings. This study offers policymakers critical insights for maintaining stable housing finance support during economic downturns and provides a foundational reference for establishing preemptive crisis response systems in the housing market.