The effect of interest rate hikes on home prices lasts about 15 months

As a result of the Korea Research Institute for Human Settlements analyzing the impact of interest rate fluctuations on housing prices, it was found that the effect of interest rate hikes on home prices generally lasts for about 15 months. According to the report released on the 23rd, when interest rates rise by 0.25 percentage points, apartment prices nationwide fall by 1.2% after 6 months, with the decline easing to 1.1% after 12 months and 0.9% after 24 months. The researchers explained that an interest rate hike works by raising financing costs, thereby lowering housing demand and prices. Conversely, when interest rates fall by 0.25 percentage points, the increase in apartment prices widened to 0.6% after 6 months, 1.2% after 12 months, and 1.7% after 24 months. The researchers said that in addition to interest rates, it is also necessary to look at channels of capital inflow such as policy finance, business loans, jeonse deposits, and gifts, and that management is needed to prevent excessive capital inflows through specific channels from increasing market volatility.