SEJONG: South Korea’s housing market continued its upside mode in the fourth quarter of last year on the back of a government-led stimulus and low borrowing costs, a report showed Wednesday.
Home prices in the country rose an average of 4.4 percent on-year in the October-December period, up from a 4.1 percent on-year gain in the previous quarter, according to a report compiled by the state-run Korea Development Institute (KDI). Seasonally adjusted home prices edged up 0.9 percent from three months earlier.
Home transactions hit 292,000 cases during the three-month period, up 0.1 percent from a year earlier, said the KDI report. However, home trading slowed down from a six-year high of 340,000 tallied in the second quarter. For the whole of 2015, home transactions jumped 19 percent on-year to 1.2 million, with the housing prices gaining 4.4 percent.
The KDI said that the increase is led by the government’s decision to lower loan-to-value and debt-to-income ratios, making it easier to borrow money from lenders.
A low interest rate trend also contributed to the improved housing market, as the Bank of Korea slashed the base rate to a record low of 1.5 percent last year in line with the Seoul government’s real estate market boosting program.
But the rise in home trading and prices slowed in the fourth quarter as the financial authorities announced a plan to tighten the mortgage loan screening systems of local banks, starting from February, in an effort to tackle the mounting household debt, the KDI noted.
According to separate central bank data, outstanding household loans extended by local banks came to 639.1 trillion won (US$529.1 billion) as of end-December, up 6.9 trillion won from a month earlier.
