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New home permits plunge 25.9 pct in July

All Headlines 17:00 August 29, 2016

SEOUL, Aug. 29 (Yonhap) -- Construction permits issued for new homes sharply dropped from a year earlier last month, the government said Monday, amid government efforts to curb growing household debts partly by limiting the supply of new houses.

The number of new home permits issued came to 61,387 in July, down 25.9 percent from the same month last year, according to the Ministry of Land, Infrastructure and Transport.

The July tally marks a turnaround from a 9.3 percent on-year spike in the previous month.

The decline comes less than a week after the finance ministry, headed by Deputy Prime Minister Yoo Il-ho, said the government will scale down the supply of new apartments as a way of limiting the rise in household debt.

South Korea's overall household debt came to 1,257.3 trillion won (US$1.18 trillion) as of end-June, surging 11 percent from a year earlier and reaching a fresh record for a third consecutive quarter.

The government insists an abundant supply of new homes is encouraging people to increase their borrowing.

Many others, however, blame record-low interest rates.

The country's household debt began to grow at a record pace after the Bank of Korea (BOK) began slashing its policy rate in August 2014 as part of efforts to bolster growth in Asia's fourth-largest economy that continues to struggle with plunging demands at home and abroad. Since then, the central bank has sent its key interest rate to a record low of 1.25 percent through five rate reductions.

Demands for new homes also began to dwindle in July, a month after the BOK announced its latest rate cut.

In July, new home construction permits issued in Seoul and its surrounding areas tumbled 27.9 percent on-year to 32,211, while those issued in rural areas came to 29,176, down 23.6 percent, according to the infrastructure ministry.

The number of new home groundbreakings also slipped 1.7 percent on-year in the same month.

Also in a separate report, the ministry said the number of new homes that remain unsold came to 63,127 last month, up 5.2 percent from the previous month.


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