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Apartment prices suffer sharpest drop in 5 years in Q2

All Headlines 15:23 July 15, 2018

SEOUL, July 15 (Yonhap) -- The prices of apartments in South Korea dropped by the largest margin in five years during the second quarter of 2018 amid toughened regulations on mortgage loans and taxation on multiple home owners, data showed on Sunday.

According to the data compiled by the Bank of Korea, apartment prices in South Korea declined 0.3 percent in the April-June period from three months earlier -- the largest fall since the first quarter of 2013, when the comparable figure was 0.7 percent.

But apartment prices in Seoul rose 0.8 percent on-quarter in the second quarter, marking the fourth consecutive year of increases, the data showed.

The central bank expects housing prices to stabilize during the remainder of the year due to a rise in market interest rates and increased supply.

Apartment prices in the affluent Gangnam district and some other neighborhoods have soared on hopes of reconstruction projects moving forward and ample liquidity circulating in the economy.

Indeed, the Bank of Korea's eight rounds of rate cuts since 2012 helped send home prices and household debt to record levels as more people took out loans to buy homes, in the face of a series of measures to rein in soaring housing prices.

Earlier measures -- tightened lending rules on homes -- have not been very effective. Last year, the government unveiled a set of measures to tighten lending rules on homes to try to cool the overheated property sector.

It adopted stricter rules requiring multiple-home owners to pay higher capital gains tax when they sell their houses. It also toughened the loan-to-value and debt-to-income ratios for new loans, which effectively limits homebuyers' ability to get home-backed loans based on the value of property they own and their income.

This undated file photo shows apartment buildings in Seoul. (Yonhap)

sam@yna.co.kr
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