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South Korea has imposed stricter mortgage limits on first-time buyers in Seoul and nearby areas due to rising apartment prices. Borrowing is now limited to 40% of a property's value, down from 70%, and the maximum loan is capped at 600 million won (around USD 421,000), regardless of income. These are the third set of restrictions since President Lee Jae Myung took office, targeting worsening affordability in the capital. With a price-to-income ratio of 21.3, Seoul now surpasses London and Sydney, highlighting the pressing challenges for new buyers in the city.
South Korea has introduced stricter mortgage regulations for first-time home buyers in Seoul and nearby regions in response to rising apartment prices. Under the new rules, first-time buyers can now borrow only 40% of a property's value, a sharp reduction from the previous 70% limit. The government has also capped the maximum mortgage at 600 million won (around USD 421,000), even if a buyer's income would allow a larger loan. These measures aim to address worsening housing affordability and prevent excessive borrowing. Advertisement
This is the third round of mortgage restrictions since President Lee Jae Myung assumed office. Analysts note that the move reflects a broader effort to stabilize Seoul's housing market, where the price-to-income ratio for apartments has reached 21.3. For comparison, London's ratio is 19.4, and Sydney's is 12.4. These numbers highlight the growing challenge of housing affordability in the capital.
Experts point out that while the new rules are intended to curb rapid price growth, they may also make it harder for first-time buyers to enter the market. Many buyers may now need larger personal savings or alternative financing options to meet the reduced borrowing limits. Past government interventions have included measures such as tighter loan-to-value ratios and stricter income verification, but apartment prices have continued to rise, prompting this latest step.
The government stated that the measures are targeted, applying specifically to first-time buyers, and aim to protect households from taking on unsustainable debt while still supporting a stable housing market. Observers expect that the new restrictions will slow the pace of price growth, but affordability pressures are likely to remain for many prospective buyers in Seoul.
Source Reuters
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