SEOUL: South Korea plans fresh curbs on housing transactions in Seoul as Acting President Choi Sang-mok (pic) vowed to take "all available steps” to prevent a frenzy in the property market that could potentially complicate efforts by policymakers to shore up the economy.
The government said on Wednesday (March 19) it will designate the districts of Gangnam, Seocho, Songpa and Yongsan in the capital as areas where apartment buyers must seek permits. The Ministry of Land, Infrastructure and Transport said in a statement the number of areas may increase if the housing market overheats, and regulations on housing loans will also be tightened.
"The government recognises the seriousness of the real estate market situation and will work in coordination with relevant ministries and local governments to respond firmly to prevent the spread of housing price instability,” Choi said in comments emailed separately.
Apartment prices in the high-income Gangnam area have jumped in particular since the city government eased rules on transaction permits last month. Mortgage loan rates have also fallen since the Bank of Korea pivoted in October, making it easier to borrow money to buy homes.
Policymakers are concerned that a resurgence in home prices may fuel an increase in household debt, a development that would put pressure on the BOK to refrain from further rate cuts at a time when many officials see the need for easier monetary policy settings to support economic growth.
The government separately is seeking to come up with an extra budget to stimulate an economy that has been rattled by President Yoon Suk Yeol’s brief martial law declaration in December and Donald Trump’s launch of a tariff campaign since returning to the White House.
Finance Minister Choi leads the government after Yoon and Prime Minister Han Duck-soo were suspended from power by parliament. The Constitutional Court is expected to deliver its verdict within days on whether those impeachment motions are valid.
The government will act "resolutely” to tamp down concerns about housing prices and punish any speculative transactions perceived to be disrupting markets, Choi said.
The BOK extended its policy hold through the summer of 2024 over concerns that an earlier pivot would add fuel to a housing market boom in the capital. The central bank eventually cut rates in October, and has since reduced rates twice more. Even so, minutes from the BOK’s Feb. 25 decision meeting showed that many on the board remain cautious about the possibility of rate cuts reigniting a buildup in private debt and threatening financial imbalance. - Bloomberg
