When do homeowners feel the same as renters? Housing price appreciation and subjective well-being in South Korea*

Are homeowners happier if housing prices increase? While many studies have examined homeownership and subjective well-being, the effect of changes in local housing prices on subjective well-being has been less studied. We argue that a change in local housing prices has divergent effects on the subjective well-being of homeowners versus renters, and these effects vary with the housing market cycle. Using data on the annual change in the average transaction price for residential housing in local districts of Seoul, South Korea from 2008 to 2018, we find that homeowners have higher subjective well-being than renters, and the gap between homeowners and renters grows as housing prices increase, mainly because renters become less happy while homeowners' happiness varies with overall housing market conditions in their city. Homeowners' subjective well-being in-creases only when housing prices go up in their own neighborhood while the citywide housing market remains stable. During an escalating housing market, increasing prices make both homeowners and renters less happy.