S. Korea’s home prices likely to drop

South Korea’s Land Minister, Park Sang-woo, stated that the country would not experience the same rapid home price increases as in the past due to an aging population and slower economy, as reported by Reuters on Tuesday.

The government plans to promote public rental accommodation to improve housing accessibility.

Median house prices peaked in June 2021, rising 45 per cent over five years before declining by 19 per cent following central bank actions. High housing costs are impacting birth rates and marriages, with the fertility rate hitting a record low in 2023.

The government aims to provide more affordable housing options, offering cheap mortgages for newlyweds planning to have children and developing a high-speed underground rail network to connect affordable housing areas to job centers in Seoul.

Additionally, regulations will be eased to increase the availability of long-term public rental homes.

To diversify investments away from real estate, the government will support young people to explore other asset options. Park stressed the need to restructure unprofitable property projects in response to weakening demand and rising input costs in the sector.