South Korea's finance minister, Choi Sang-mok, announced measures to stabilise the real estate market amid rising house prices in Seoul and the surrounding areas. These measures include increasing housing supply, restructuring real estate project financing, and controlling household debt. The government may also introduce "extraordinary" measures if the market becomes overheated due to speculative demand. This announcement aligns with the Bank of Korea's concerns about household debt growth and rising home prices. In June, house prices in South Korea rose 0.04%, with a 0.38% increase in Seoul, marking the fastest growth since November 2021.
South Korea's finance minister, Choi Sang-mok, recently announced the government's commitment to implementing policy measures to stabilise the real estate market, particularly in light of the rising house prices in Seoul and its surrounding areas. During a policy meeting with the land minister, Choi highlighted the increased volatility in the real estate market, noting that apartment prices have been climbing more rapidly in the capital region.
Choi emphasised that the government is prepared to make a concerted effort to stabilise the market. He outlined several policy measures intended to address the situation. These include increasing the supply of housing, accelerating the restructuring of real estate project financing, and intensifying efforts to control the rise in household debt. The minister also mentioned that the government would consider implementing "extraordinary" measures if the market were to become overheated due to speculative demand.
The announcement comes in the context of recent observations by the Bank of Korea. The Central Bank has identified household debt growth and rising home prices as key factors to monitor closely. Last week, the Bank of Korea left the policy rate unchanged at 3.50% for the twelfth consecutive meeting, the highest rate since late 2008, but indicated that it was open to the possibility of rate cuts in the future.
In June, South Korea experienced a 0.04% increase in house prices, breaking a six-month streak of declines. The price increase in Seoul was notably higher at 0.38%, the fastest growth rate since November 2021, according to data from the Korea Real Estate Board. This surge in prices underscores the need for the government's intervention to ensure market stability.
The finance minister reiterated the government's resolve to stabilise the market during the policy meeting, stressing the importance of a stable real estate environment for the broader economy. Choi's remarks were made in response to the recent uptick in volatility, particularly in Seoul and the wider capital area, where apartment prices have been rising more sharply.
Choi detailed the government's planned measures, including increasing the housing supply to meet demand, which is a fundamental step in curbing price increases. He also highlighted the importance of restructuring real estate project financing to ensure that the financial aspects of property development are sustainable and do not contribute to market instability. Additionally, Choi underscored the necessity of controlling the rise in household debt, which has been a growing concern as it poses risks to both the real estate market and the broader financial system.
The finance minister also mentioned that the government is prepared to introduce "extraordinary" measures if it determines that the real estate market is becoming overheated due to speculative activities. This statement indicates a proactive stance by the government to prevent speculative bubbles and ensure long-term stability in the housing market.
The Bank of Korea's recent decision to keep the policy rate unchanged reflects a cautious approach to monetary policy amidst the current economic conditions. The central bank's focus on household debt growth and rising home prices as key factors to monitor aligns with the government's efforts to stabilise the real estate market.
In conclusion, the South Korean government, under the leadership of Finance Minister Choi Sang-mok, is committed to stabilising the real estate market through a combination of increased housing supply, restructuring of project financing, and efforts to control household debt. These measures are aimed at addressing the recent volatility and ensuring a stable and sustainable real estate market in Seoul and the wider capital area. The government remains vigilant and ready to take extraordinary steps if necessary to prevent overheating and speculative activities in the market.
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