Do housing price changes affect mental health in South Korea?

Abstract

Background: The share of real estate in the household assets of Korean households is around 74.7%, which is much higher than in most other countries. There is a growing concern over the association between mental health and depression in modern society. Thus, the objective of this research was to empirically analyze the impact of house prices on mental health.

Methods: This study carried out an empirical analysis of the impact of house price changes on depression, which is a proxy variable of mental health, by using Korea Health Panel data and a correlated random-effect (CRE) logit model. From Korea Health Panel data (2009-2015) – which is microdata of the status of healthcare services in Korea, spending on medical costs, health levels, and so on – a total of 191,121 samples of subjects aged over 20 were selected. For the housing price index, data was used from the Korea Appraisal Board.

Results: The results of this research found that females, older people, unmarried people, households with more members, and smokers are more likely to experience depression. The paper also found that housing price is negatively correlated with depression and is statistically significant. Furthermore, housing price is negatively correlated with depression and is statistically significant.” along with the increase in the price of houses, the likelihood of experiencing symptoms of depression of homeowners appeared decreasing with the value of the estimated coefficient of 0.010, which was statistically significant. The likelihood that people who do not own houses experience depression is not correlated with changes in house prices.

Conclusions: This research is the first empirical analysis to find that house prices are negatively correlated with depression, a proxy variable of mental health. The results of this paper suggest that government policy of intervention in real estate markets may have an impact on the mental health of people, as well as the macro-economy. Hence, the government needs to closely examine various factors such as the mental health of people, as well as macro-economic aspects, when it establishes and implements real estate policies. [Ethiop. J. Health Dev. 2020;34(Special issue-3):48-59]

Keywords: House prices, depression, CRE logit model, panel data