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Bloomberg
4 days ago
- Business
- Bloomberg
Seoul Home Price Growth Slows Again, Paving Way for BOK Rate Cut
South Korea's property market cooled as government measures to rein in runaway prices curbed demand, bolstering the case for the Bank of Korea to consider resuming its rate-cut cycle later this month. Growth in Seoul apartment prices slowed to 0.1% in the second week of August, reversing course after nudging higher in the previous week, according to data from the Korea Real Estate Board released Thursday. Still, prices extended their streak of positive weekly gains to 28 weeks, despite occasional slowdowns.
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Korea Herald
16-06-2025
- Business
- Korea Herald
[Editorial] Expand supply
Seoul apartment prices hit a record high as presales shrink, liquidity surge looms The Korean housing market is showing signs of heating up. Last week, Seoul apartment sale prices rose 0.26 percent from the previous week, according to data from the Korea Real Estate Board. It was the highest weekly increase since August last year. Seoul apartment sale prices have moved up for 19 consecutive weeks. The upward trend of apartment prices in parts of Seoul is threatening to spread to areas of nearby Gyeonggi Province with large populations, such as Gwacheon and Bundang. The government had an emergency meeting Friday to check the real estate market. There are many factors behind the recent surge in housing prices, but its root cause lies in a supply shortage. This year, presales of new Seoul apartments decreased 28 percent year-over-year to 7,350 units, the smallest number in four years. In Seoul or densely populated areas like Seoul, new apartments are supplied through reconstruction or redevelopment. Spare units to be built, except units for existing landowners, are presold in installments to the general public. Expectations for expansion of liquidity supply stimulate the sentiment of investment in the real estate market. Many anticipate the Bank of Korea to cut the benchmark interest rate from the current 2.5 percent to 2.0 percent in the second half out of concerns about economic recession. Liquidity is scheduled to increase when the government expends an additional supplimentary budget worth at least 20 trillion won ($14.6 billion). The budget plan to be unveiled soon will include local currency vouchers to be handed out to every Korean, a key campaign promise by President Lee Jae-myung. The surge in Seoul apartment prices is also affected by the last-minute jump in the issuance of housing loans. People rush to take out mortgage loans to buy homes before strengthened repayment requirements are implemented next month. Last month, mortgage loans increased to 5.6 trillion won, the largest in eight months. It is difficult to ignore people's expectation that housing prices will likely shoot up while the Democratic Party of Korea is in power, as they experienced in the Moon Jae-in administration. People seem to believe that the real estate policies of liberal governments tend to be focused on curbing demand, which drives up home prices. In fact, the Moon government treated owners of multiple homes like criminals. It took policies to impose heavy taxes on landlords and multihouse owners, lower presale prices of new apartments and tax "excess" profits from reconstruction. If apartment presale prices are mandatorily set below the market value of nearby apartments, advance buyers could make a profit, while existing homeowners shoulder the greater burden of reconstruction costs. These measures distressed multihome owners in particular, but only drove them into selling their homes in less expensive areas and owning a single home in the most expensive areas, such as well-to-do districts of Seoul. As a result, housing prices in Gangnam and a few other affluent areas of the capital skyrocketed, sending home prices rising across Seoul more broadly. Fortunately, President Lee pledged to vitalize reconstruction and redevelopment and avoid regulating homeowners with taxes. Yet, a "buy homes first" atmosphere is strong. The government said that if housing price instability continues, it would consider expanding the regulated area where land trade is restricted. However, policies to hold down demand have limitations. They could hike up property prices near the regulated areas. The first thing to do is draw up a blueprint for supply expansion. Though it is impossible to increase housing supply immediately, the government could calm uneasiness in the market just by showing a clear policy direction. Developing unpopular areas far from Seoul will have a limited effect. High-demand areas need to be developed first. Reconstruction restraints in popular areas should be reconsidered to increase supply. The new government should avoid repeating the policy error of regulating the market thoroughly. Restraining demand without expanding supply when prices keep rising instigates housing price hikes. That is a lesson that leftist liberal governments of the past have left behind.
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Korea Herald
27-04-2025
- Business
- Korea Herald
[Yoo Choon-sik] Statistical integrity must top governance agenda
We have been witnessing an exponential increase in the frequency of writings emphasizing the value of good governance over the past several years, particularly in debates on how to ensure that artificial intelligence innovation contributes to the sustained prosperity of humanity. South Koreans are also observing a growing number of discussions on governance issues in another context — sparked by the political turmoil following former President Yoon Suk Yeol's declaration of martial law in early December last year. This unrest culminated in the Constitutional Court's decision to depose him and is continuing ahead of the snap election scheduled for early June. Like millions of my fellow citizens, I sincerely hope the June 3 election will help put to rest the widespread concerns about governance issues in this country. However, such hope may prove premature — especially in light of a recent announcement by the Board of Audit and Inspection, which reported suspected systematic manipulation of key government statistics on the housing market during the Moon Jae-in administration. In a revelation that has shaken the foundations of public trust, the nation's supreme audit institution has found that between January 2018 and October 2021, the Korea Real Estate Board was pressured by the presidential office and the Ministry of Land, Infrastructure and Transport to alter housing price data on 102 occasions. These manipulations were intended to portray the administration's real estate policies in a more favorable light by reporting artificially reduced growth rates — or even declines — in housing prices, in contradiction to actual market trends. During this process, the REB was subjected to threats of budget cuts and staff reductions if it failed to comply, highlighting the coercive methods employed to distort the truth. The manipulation extended beyond housing statistics. Discrepancies between official data and private-sector statistics — particularly those from KB Kookmin Bank, a widely trusted source of housing market trends — prompted the Moon administration to explore ways to suppress independent data providers. According to internal government documents, measures were even proposed to regulate or marginalize private indices, including the introduction of a certification system for private statistics and the imposition of fines for noncompliance. The objective was unmistakable: to reduce public scrutiny and control the narrative around housing price trends. The findings, detailed in a final report following a nearly three-year investigation, expose a disturbing pattern of falsification involving housing price data, income figures and employment statistics. This scandal is a textbook case highlighting the governance challenges facing South Korea, including one to restore trust in government statistics. When official numbers are manipulated, the consequences extend far beyond flawed policymaking — they also erode confidence in governance, financial markets and public institutions. While this scandal is particularly alarming, it is not unique — many other nations have engaged in similar distortions of statistical data, with far-reaching consequences. One of the most infamous examples occurred in Greece, where authorities misrepresented budget deficit figures to meet European Union requirements. Trust matters more than anything else The Greek government understated its fiscal deficit and debt levels, concealing the country's true financial instability. When the deception was uncovered in 2009, Greece plunged into a severe economic crisis marked by austerity measures, surging unemployment and a prolonged recession. The scandal not only undermined trust in Greece's governance but also contributed to wider financial instability across Europe. Other notable examples include Argentina and China. Under the administrations of Nestor and Cristina Fernandez de Kirchner, Argentina's government manipulated inflation data to make economic conditions appear less dire. In China, authorities have previously faced accusations of inflating economic growth figures to project an image of stability and prosperity. On the surface, some might argue that manipulating statistics provides short-term political gains. However, the long-term consequences are far more serious than and often reach beyond what most people anticipate. When governments distort statistics, public faith in official data deteriorates, complicating the implementation of future policies. Once skepticism sets in, public institutions must fight an uphill battle to restore credibility — a process that can lead to enduring political instability. Falsified economic data can also mislead investors, businesses and international organizations. We have seen this in countries that understated financial risks or exaggerated growth figures, only to face market crashes, capital flight and economic crises — as was the case in Greece and Argentina. In democratic societies, transparency is essential. When governments manipulate statistics, they undermine accountability, enabling political leaders to deflect criticism and justify flawed policies. Distorted data also skews public perceptions on critical issues such as poverty, crime and unemployment, prompting citizens to respond based on false premises. This misinformation can lead to misguided protests, misplaced complacency or irrational economic behavior. Moreover, countries caught manipulating statistics risk damaging their global reputations. International organizations such as the International Monetary Fund, the Organization for Economic Cooperation and Development and the World Bank rely heavily on accurate data. Violations can result in reduced foreign aid, restricted investment opportunities and diplomatic repercussions. Statistical integrity is indispensable for sound governance. Even if initial motivations are not malicious, manipulating data may offer short-term political benefits at the cost of long-term consequences — including economic instability, erosion of public trust and weakened democratic institutions. We understand that the incoming government — which will begin work immediately after the June 3 election results are confirmed, due to the nature of this snap election — will face an enormous list of urgent tasks from day one. There is no doubt that each task carries significant weight, whether it involves responding to the impact of US tariff hikes or revitalizing the country's efforts to stay competitive in the global AI innovation race. Nonetheless, I wish to stress that restoring public trust in official statistics should be prioritized at the very top of this list. Governments must implement independent oversight, reinforce legal safeguards and pursue institutional reforms to ensure that national data remains free from political interference. A nation's success is grounded in good governance, the very foundation upon which democracy flourishes and the well-being of its people is protected. Good governance ensures that power serves the people, not political agendas. Trust in governance is not a given; it must be earned through integrity and accountability. Yoo Choon-sik worked for nearly 30 years at Reuters, including as the chief Korea economics correspondent, and briefly worked as a business strategy consultant. The views expressed here are the writer's own. — Ed.
