SEOUL, June 26 (Korea Bizwire) – The housing market in Seoul and its adjacent areas are in an expansion phase, South Korea’s central bank said Monday, a move that has prompted the government to crack down on speculative real estate investments.
The Bank of Korea (BOK) said in a report that the housing prices in Seoul and its adjacent areas rose 0.5 percent in the first five months of this year from end-December, compared with a 0.3 percent hike across the country during the same period.
The hike in the Seoul metropolitan area is driven by prices of old apartments that are being rebuilt, the BOK said, citing a recent survey of 96 housing experts.
The latest report came as South Korea’s new transport minister vowed to crack down on speculative real estate investments.
Land, Infrastructure and Transport Minister Kim Hyun-mee said last week that real-estate speculation has pushed up home prices in recent years and the government’s new lending rules are designed to send warnings against speculative forces.
Under the measures to be put into effect July 3, the loan-to-value ratio in Seoul, Gyeonggi Province, some areas in Busan and the administrative capital of Sejong will be lowered to 60 percent from 70 percent.
The debt-to-income ratio in the areas will be marked down to 50 percent from 60 percent.
Separately, the BOK said that the number of Chinese tourists who traveled to South Korea’s southern resort island of Jeju fell 88.6 percent in the April-May period from a year earlier.
It said the sharp decline can be attributed to China’s ban on group tour sales to South Korea and the cancellation of cruise ships making port calls to the island.
Beijing has taken the retaliatory step in protest of the deployment of an advanced U.S. missile defense system in South Korea.
Seoul and Washington deployed the Terminal High Altitude Area Defense system as a means to counter North Korea’s evolving nuclear and missile threats. But China has repeatedly expressed opposition to the U.S. anti-missile system out of a concern that the deployment could hurt its security interests.