S Korea unveils tough measures to control speculative real estate investment

3 August, 2017 12:00 AM printer

SEOUL: The new South Korean government under President Moon Jae-in, which was inaugurated on May 10, unveiled its second comprehensive measures to control speculative investment into real estate amid a rapid increase in home prices.

Minister of Land, Infrastructure and Transport Kim Hyun-mee announced the measures at the government complex building Wednesday. The minister, who took office on July 23, said in her inaugural address that recent home price hikes were attributable to speculative investors, heralding a tougher action on speculative property investment, reports Xinhua.

The previous government disclosed anti-speculation measures in November last year, and the new administration took another action in mid-June to control speculative investment in the real estate market.

Despite the government warnings against speculative investors, apartment prices in the capital Seoul have risen at a faster pace in the past four weeks. In some parts of Seoul, the selling price of apartment surged over 100 million won (88,900 U.S. dollars) in a month.

According to the land ministry data, the percentage of home purchase made by those who own one house or more was an average of 43.7 percent of the total from 2013 to 2017, up from 31.3 percent tallied from 2006 to 2007.

In August 2005, the government of late President Roh Moo-hyun, for whom President Moon served as chief of staff, announced the country's toughest-ever measures to regulate speculative property investment, helping cool down the overheated real estate market.

Impeached President Park Geun-hye, Moon's predecessor, abolished many of the 2005 regulations to prop up the lackluster economy by bringing a boom to the real estate market.

Regulations on mortgage financing were eased, and the benchmark interest rate was lowered to an all-time low of 1.25 percent in June last year, resulting in the record-breaking increase in household debts to purchase new home with borrowed money.

Most of the 2005 regulations were restored through the Wednesday measures, such as the tightening of mortgage financing, the designating of overheated speculation areas and the heavier transfer tax on those who own over two homes.