S Korea unveils housing supply measures in an attempt to curb price rises

South Korea said on Thursday it would ease regulations and increase government support to boost supply in the real estate market, targeting the building of more than 400,000 new homes in the next six years as it seeks to curb steep rises in prices.

The real estate market snapped a six-month run of declines in June, as prices in the capital Seoul jumped by the most in 2-1/2 years, raising concerns among policymakers of a spike in household debt in what is already one of the world's most-indebted countries.
 

The government said it would speed up existing projects to build 217,000 houses in Seoul and satellite cities and come up with new projects for additional supply of at least 210,000 homes. There were 8 million homes in Seoul and the surrounding Gyeonggi province in 2023.
 

"Sufficient house supplies to meet demand and managing liquidity at adequate levels are key to stabilising the real estate market," Finance Minister Choi Sang-mok said.
 

The government plans to loosen regulations on reconstruction projects and simplify the process, to release "green belt" areas near Seoul for new projects, and raise the limit on loan guarantees for builders to expand liquidity support.
 

It also plans to increase the supply of public housing for rental, by as much as is required in Seoul until apartment supply conditions are normalised in the capital.
 

The government will provide or extend tax cuts for construction firms, rental businesses and first-time buyers of small houses.

Last month, consumer sentiment on house prices was the most bullish since November 2021, according to a central bank survey, after interest rates on mortgage loans fell in June for the eighth straight month to 3.71%, the lowest since December, 2021.
 

The Bank of Korea opened the door for rate cuts after holding interest rates at a 15-year high of 3.50% for the 12th straight meeting in July, but the board was divided over when to act amid financial stability concerns.