South Korea’s Rising Home Prices

SEOUL (Reuters) – South Korea’s home prices rose rapidly in July, with Seoul experiencing its highest increase in over four years. This surge raises concerns about financial stability due to a bullish housing market.

According to the Korea Real Estate Board, the house transaction price index climbed by 0.15% in July, up from 0.04% in June, marking the fastest increase since October 2023.

In Seoul, prices surged 0.76%, the sharpest rise since December 2019, propelled by heightened investment demand in areas marked for reconstruction, leading to record-high transactions.

Earlier this month, the government announced measures to enhance supply, aiming to build over 400,000 new homes in the next six years to mitigate soaring prices.

In July, the Bank of Korea hinted at potential interest rate cuts, although the board remains divided on timing due to worries that lower borrowing costs may exacerbate price hikes in the housing sector. The central bank’s next meeting is scheduled for August 22.