Finance Minister Choi Sang-mok outlined plans on Wednesday to address increasing volatility in South Korea’s real estate market, particularly in Seoul and surrounding areas, where housing prices have risen. Speaking during a meeting of economy-related ministers in Seoul, Choi emphasized the government’s commitment to monitor market conditions closely and accelerate housing supply initiatives as necessary.
“While overall industry indices remain stable, volatility has risen in the real estate market,” Choi stated, underscoring the need for enhanced market monitoring and expedited supply measures. He added, “If needed, we will actively seek ways of expanding the supply further.”
In response to escalating household debt levels, Choi announced plans to gradually tighten lending regulations, including the implementation of stressed debt service ratio (DSR) rules and other measures aimed at managing financial risks.
Recent data highlighted a significant surge in household loans extended by South Korea’s top five commercial lenders, marking the sharpest increase in nearly three years. As of June, total household loans amounted to 708.5 trillion won, reflecting a more than 2% rise since the end of 2023.
Despite criticism, the government postponed the implementation of stricter DSR rules by two months to provide support to small business owners and low-income earners affected by economic challenges, including those stemming from the COVID-19 pandemic.
Choi also reiterated the government’s commitment to bolstering domestic demand and employment prospects. He highlighted ongoing efforts, including President Yoon Suk Yeol’s recent announcement of a 25 trillion-won ($18 billion) support package for self-employed individuals and micro-business owners grappling with financial burdens incurred during the pandemic.
The comprehensive measures outlined by Minister Choi reflect South Korea’s proactive stance in navigating economic uncertainties, prioritizing stability in the real estate market and effective management of household debt amid evolving global and domestic economic conditions.
