The South Korean housing market is heating up again, and the flames are particularly intense in the capital, Seoul. In July, home prices across the country rose at a faster pace, with Seoul leading the charge, according to data released on Friday by the Korea Real Estate Board. The surge in prices, which marks the sharpest rise in more than four years, is sparking fresh concerns about the nation’s financial stability.
The house transaction price index climbed 0.15% in July, accelerating from a 0.04% increase in June. This marks the fastest monthly rise since October 2023, a clear signal that the market is anything but cooling. In Seoul, prices jumped a striking 0.76% over the month—the most significant leap since December 2019. The city’s housing market is being fueled by a growing demand for investment properties, especially in areas earmarked for reconstruction, where record-high prices are becoming the norm.
The government is trying to rein in the runaway market. Earlier this month, it rolled out a plan aimed at boosting the supply of homes, with an ambitious goal of building over 400,000 new homes in the next six years. The hope is that increasing supply will help curb the steep rise in prices, but whether this will be enough remains to be seen.
Adding another layer of complexity, the Bank of Korea is grappling with its next move. In July, it hinted at the possibility of cutting interest rates, a decision that could inject more fuel into the already blazing housing market. But the central bank’s board is split on the timing of such a move, aware that lower borrowing costs could further inflate home prices. The next meeting on August 22 could be a pivotal moment in the ongoing struggle to balance economic growth with financial stability.
As Seoul’s housing market continues its upward trajectory, all eyes are on policymakers and the central bank, as they navigate the delicate task of cooling a market that seems determined to keep heating up.
(Source: Investing.com | MSN | Korea Real Estate Board)
