South Korea on Thursday unveiled a package aimed at boosting housing supply and supporting young homebuyers as the government seeks to stabilise a property market where rising prices have become a growing economic and political concern.The Financial Services Commission said it would increase policy support for construction project financing to at least 47.8 trillion won ($33.72 billion), from a planned 26.3 trillion won.The government will also provide additional policy loans and other financial support for young people and newlyweds buying homes for their own use.At the same time, authorities will maintain measures aimed at controlling speculative demand and household borrowing.South Korea has been struggling to balance housing affordability with its high level of household debt. The country has introduced tighter lending rules in recent years to prevent excessive borrowing and speculation in the property market.The Financial Services Commission said it would manage household debt growth at around 3% this year, compared with its previous target of 1.5%.President Lee Jae Myung said on Thursday that the country’s real estate bubble had reached a level that could no longer be ignored. He also warned that prolonged weakness in the property market could contribute to a broader economic downturn.The housing market has become a politically sensitive issue for Lee’s government as home prices continue to rise.House prices recorded their biggest monthly increase since November 2021 in June, adding to pressure on policymakers to respond.Lee’s approval rating fell to 51% in a July 24 Gallup Korea survey, its lowest level in a month, with housing market policy cited among the factors behind the decline.The government’s latest package is intended to increase the flow of financing into housing construction while providing targeted support to younger households seeking to buy homes.Officials are attempting to improve access to housing without fuelling another increase in household debt or speculative activity.The measures highlight the challenge facing South Korean policymakers as they try to bring down housing pressures while maintaining financial stability.
