A recent report from the Bank of Korea reveals that the rise in housing prices has a more significant negative impact on the consumption patterns of younger individuals and first-time homeowners than any positive effect on consumer spending. The report highlights that instead of boosting consumer spending, higher housing costs divert financial resources towards savings and loans for future housing purchases. Data analysis indicates that since 2013, households across all age groups have shown a decline in their average consumption propensity, particularly among individuals aged 25 to 39 who do not own homes, as they focus on saving for potential home purchases.

The findings illustrate a clear divide in the economic effects of housing price increases based on age and housing status. Specifically, the report points out that for households under the age of 50, a 1% rise in housing prices correlates with a 0.2% to 0.3% decrease in consumption. In contrast, for those aged 50 and older, the effect on consumption is minimal. This suggests that while younger households feel a constraint on their spending due to rising housing costs, older homeowners who have already accumulated assets are not significantly affected by these changes, and might even see an increase in their consumption.

Furthermore, the economic welfare analysis indicates that a 5% increase in housing prices results in a 0.23% decrease in economic welfare for households under 50, while households over 50 experience a 0.26% increase in welfare. These dynamics highlight how financial burdens associated with housing, particularly loan repayment obligations, can pressure younger homeowners to cut back on spending, thereby creating a disconnection between asset appreciation and overall consumer spending in the economy.