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The South Korean government introduced stricter mortgage regulations in Seoul this past week, alongside plans to increase affordable housing supply in the capital. The loan-to-value ratio in affluent areas such as Gangnam and Yongsan has been reduced to 40% from 50%. Authorities also outlined a strategy to utilise land owned by state-run developers and ease redevelopment rules to address the persistent housing shortage.
The South Korean government moved to reinforce mortgage restrictions in Seoul this past week, aiming to curb demand while addressing the housing shortage by increasing the supply of affordable homes. Advertisement
Authorities announced that the loan-to-value (LTV) ratio for properties in high-value districts, including Gangnam and Yongsan, would be tightened to 40% of a property?s value, compared with the earlier 50%. The measure took effect from the start of the week.
South Korea maintains a complex framework for household borrowing, particularly mortgage lending, which is assessed based on both income levels and the value and location of properties. Officials said that as concerns lingered about a potential surge in housing prices within the metropolitan region, it was necessary to implement extraordinary measures that would not only enhance supply but also temper speculative demand.
The government further outlined plans to expand the use of land owned by state-run companies such as the Korea Land & Housing Corporation. This will be directed towards new housing development, while regulations surrounding the demolition and rebuilding of apartment complexes will be streamlined. These initiatives are intended to accelerate construction activity and address the capital?s continuing housing shortage.
By tightening mortgage lending rules in prime Seoul districts and mobilising land from state-owned entities, the government is signalling its commitment to stabilising the property market. With streamlined redevelopment regulations, the approach seeks to balance market discipline with expanded residential construction, tackling both demand pressures and long-standing supply gaps in the capital.
Source - Reuters
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