South Korea unveils package to boost housing supply, support young buyers

SEOUL - South Korea said on Aug 13 it would raise financial support for construction projects and ease regulations for young homebuyers as part of efforts to stabilise a red-hot housing market.

Earlier in August, the government of President Lee Jae Myung proposed higher taxes on wealthy homeowners.

Lee’s approval ratings have been falling on rising house prices and stock market volatility.

“The real estate bubble has reached a level that can no longer be left unchecked,” Lee said during a meeting with his top aides on Aug 13. “If this situation continues, we could face what happened in a certain country – the so-called ‘lost decades’.”

“We must concentrate all available means and capabilities on solving the real estate problem – a ticking time bomb that threatens people’s lives and the country’s future.”

The Aug 13 measures are aimed at “stabilising the property market by stimulating housing supply and through a comprehensive financial package for young people and those with actual demand”. the Financial Services Commission said in a statement.

The FSC said it would raise policy support for financing construction projects to 47.8 trillion won (S$43.22 billion) or more, from a planned 26.3 trillion won, to boost housing supply.

The FSC also announced financial support measures, such as new policy loans, for young people and newlyweds who buy a house to live in, while maintaining or tightening restrictions on speculative demand.

South Korea, one of the world’s most indebted countries, has complex borrowing rules in place in a bid to curb household debt.

The FSC said it would manage debt growth at around 3 per cent in 2025, up from the previous target of 1.5 per cent.

President Lee’s approval ratings hit a one-month low of 51 per cent in a survey by Gallup Korea on July 24, with housing market policy being cited as one of the main factors, after house prices rose in June by the most since November 2021. REUTERS