The Korea Local Administration Review

The purpose of this study is to analyze whether the policy lowering the rateof purchase tax on house with priority given to the acquisition and registrationtaxes has achieved the expected results. Concretely, we regressed ofresidential land transactions(the index of housing transactions) on severalvariables including housing price, housing demand and supply, macroeconomicenvironment, and institutions using the transfer function model. As a result, ouranalysis shows that the policy has been little support for promoting housingtransactions across the southern area of a river in seoul and seoul itself after2007 in spite of the reduction of the rates of acquisition and registration taxesone time at 2005 and two times at 2006. This means that the policy cuttingthe purchase tax to promote housing transactions had no success at least, andthat it resulted in the poor local finance more fragile by pressuring the localautonomous entities which gain their main tax revenue from the acquisition andregistration taxes to take on the burden of the reduction of the purchase taxrevenue.