South Korea Pledges Decisive Action to Stabilize Housing Prices

South Korea’s President Lee Jae Myung stated that the government will definitively achieve stability in housing prices. He announced a strategy to break the concentration of economic power in the Seoul metropolitan area. The plan aims to create two major economic hubs within the country.

The administration intends to enforce strict measures regarding supply, regulation, and taxation. President Lee identified the over-concentration of infrastructure and population in Seoul, Gyeonggi, and Incheon as the primary driver of price inflation. He argued that this imbalance fuels the persistent belief in the unbeatable nature of real estate assets.

Regional development counters capital concentration

The government plans to distribute financial resources more effectively to the provinces. President Lee cited the need to persuade companies to relocate and to build an administrative capital in the regions. This move seeks to reduce the gravitational pull of the metropolitan area on the national workforce.

The administration views the current market dynamics as a result of long-term policy failures. Construction permits and projects have halved since 2022, according to the President. This reduction in supply has exacerbated the scarcity of housing in prime locations like Gangnam.

Liquidity and growth drive market pressure

President Lee noted that the nominal growth rate exceeded 20 percent in the second quarter. This represents the highest level recorded since the 1970s. The resulting increase in liquidity contributes directly to rising housing prices across the market.

The administration acknowledges the difficulty of the current interest rate environment. Rising economic burdens are leading to an increase in auction items and loan delinquencies. The government expects these factors to gradually stabilize as the market adjusts to the new financial conditions.

Supply expansion remains central policy

The government will accelerate the development of new housing sites. This includes the reconstruction and redevelopment of existing urban areas. The Prime Minister’s office monitors construction permits daily to ensure compliance with these targets.

Data from GN auto markets/housing: housing prices indicates a shift in market trends. Declines have begun in areas including Gangnam while outskirts continue to rise. The administration characterizes this as a flattening of the market that requires sustained regulatory attention.