This photo taken June 27, 2025, shows an apartment complex in Seoul. (Image courtesy of Yonhap)
SEOUL, June 27 (Korea Bizwire) — The financial authorities’ latest measures to restrict ballooning household debt are expected to help cool down the overheated housing market in Seoul’s sought-out areas, experts said Friday.
The Financial Services Commission (FSC) announced earlier in the day that all local lenders will be forced to sharply lower their household lending, while home-backed loans for home purchases in the capital area will be capped at 600 million won (US442,000), starting next week.
The unprecedented move comes as home prices in Seoul, especially in the affluent Gangnam area and the central districts of Mapo, Yongsan and Seongdong, have gained traction, which has again led to a rise in household debts.
“Homes that require large amounts of borrowing will be affected the most,” said Park Won-gap, a real estate analyst at KB Kookmin Bank. “Targeted areas will likely experience a cooling-off period, although the measures may only slow the pace of price increases rather than reversing them.”
He added that the market in the second half of the year could see price gains in previously unpopular districts, narrowing the price difference between them and those in high demand.
Ham Young-jin, head of the real estate research division at Woori Bank, also said the latest measures could help the market take a breather for the time being.
“It could help ease the recent frenzy where buyers were sending down payments without even viewing homes, especially near riverside areas in Mapo and Seongdong, where prices surged nearly 1 percent weekly,” Ham said.
However, some experts voiced concerns that the measures could exacerbate inequality in the housing market, impacting low-income households more than high-income or cash-rich buyers.
“Even homes on the outskirts of Seoul now cost close to 1.5 billion won, and middle- to low-income families who cannot afford full payments without loans could be hit harder,” said Park Hap-soo, an adjunct professor at Konkuk University’s graduate school of real estate.
He also warned that restricting mortgage loans for use in living expenses, which the FSC has also announced, could “have a chilling effect on economic activity amid an ongoing downturn.”
(Yonhap)
