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S. Korea to further tighten lending rules, expand regulated areas to curb rising home prices

Economy 09:37 June 17, 2020

SEOUL, June 17 (Yonhap) -- South Korea will tighten lending rules and designate areas subject to tighter regulations in an effort to stem a further rise in housing prices, the government said Wednesday.

The government is set to roll out its toughest measures yet to stem rising housing prices in Seoul and some unregulated areas despite a series of measures, including tax hikes and loan regulations.

Under the measures, South Korea will increase the number of areas subject to tougher regulations, tighten lending rules and hike comprehensive real estate taxes.

This photo, taken June 16, 2020, shows apartment buildings in Seoul. (Yonhap)

Housing prices in Seoul and some adjacent cities have risen and overheating appears to spread to non-regulated areas despite the government's efforts to cool the real estate market.

Under the government's property rules unveiled in December, mortgage loans are banned for purchase of houses worth more than 1.5 billion won (US$1.3 million) in areas designated as "speculative" and "overheated speculative."

The loan-to-value ratio for the purchase of a home valued at between 900 million won to 1.5 billion won was also cut to 20 percent from the previous 40 percent.

Home transactions in South Korea sank more than 30 percent in April from the previous month due to tougher property rules and the new coronavirus pandemic, according to government data.

But the tally rose roughly 29 percent, compared with the previous year.

Excessive liquidity, sparked by a long streak of low rates, could fuel a rise in home prices, forcing the government to closely monitor the property market.

sooyeon@yna.co.kr
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