SEOUL – South Korean house prices recorded the biggest decline in nine years as the central bank’s 16-month tightening cycle weighs on the property market, adding to credit concerns for policymakers.

Nationwide home prices dropped 0.32 per cent in November from a year earlier, while Seoul’s slid 0.12 per cent, according to data from Kookmin Bank.

South Korean surveyors tend to count the price changes of traded homes against the total value of wider groups, which can result in markedly smaller incremental changes.

The deteriorating outlook is top of mind for policymakers as they try to avert a hard landing in the housing market.

Property is a key driver of South Korea’s record-high household debt and several construction firms are also struggling.

Finance Minister Choo Kyung-ho and Bank of Korea governor Rhee Chang-yong on Monday announced a fresh set of steps to support the housing market.

They are seeking to ease credit strains that continue after the developer of a local theme park missed a debt payment earlier in 2022.

Forward indicators suggest that the housing market correction is likely to deepen. The outlook for nationwide property prices slid further to 59 in a Kookmin Bank survey that sets 100 as the dividing line between optimism and pessimism.

The Bank of Korea is forecast to raise its key interest rate at least once more to try to tame inflationary pressure. The benchmark has risen by 2.75 percentage points since August 2021. BLOOMBERG