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South Korea mulls reining in overheated Seoul housing market

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South Korea’s Ministry of Land, Infrastructure and Transport considers stepping in when housing prices fluctuate by 0.3 per cent or more week-on-week. YONHAP NEWS AGENCY

South Korea mulls reining in overheated Seoul housing market

With housing prices in Seoul showing clear signs of rebounding, the South Korean government is considering taking steps to rein in the overheated market.

Officials at the Ministry of Land, Infrastructure and Transport said on Sunday that the ministry will intervene if housing prices in Seoul grow faster than expected on the basis of government projections.

According to the Korea Appraisal Board on July 1, Seoul apartment prices had increased 0.02 per cent from a week before, ending a downward trend that went on for eight months since November, when the government’s real estate speculation countermeasures took effect.

Weekly fluctuations in housing prices are the standard used to determine whether there has been an excessive increase, the ministry said. If housing prices fluctuate by 0.3 per cent or more week-on-week, the government considers stepping in.

“If the weekly fluctuation rate were to exceed 0.3 per cent and keep increasing, the government would deem the market to have become overheated and take further measures,” said a senior official from the Transport Ministry.

A weekly increase of 0.3 per cent, if it continues, adds up to a 15.6 per cent increase over the course of a year. This means one billion won ($850,000) worth of real estate in Seoul would be worth more than 1.15 billion won a year later.

Last September, the government announced a series of measures to rein in soaring housing prices in Seoul, imposing additional taxes on owners of multiple homes. The measure decreased housing prices in Gangnam and other affluent areas of Seoul.

Meanwhile, more than half of real estate experts expected that housing prices in Seoul will increase within a year. According to a survey from the Korea Development Institute released on Sunday, about 54 per cent of 106 surveyed experts predicted a price hike. THE KOREA HERALD