S. Korea tightens real estate regulations

SEOUL — The South Korean government unveiled a raft of measures to control speculative investment into real estate amid a rapid increase in home prices.

Minister of Land, Infrastructure and Transport Kim Hyun-mee announced the changes at the government complex building on Wednesday.

The minister, who took office on July 23, said in her inaugural address that recent home price hikes were attributable to speculative investors and tougher action was required.

Apartment prices in the capital Seoul have risen at a faster pace in the past four weeks. In some parts of the city, the selling price for apartments surged more than 100 million won ($89,000) in a month.

According to Land Ministry data, in the last four years 43.7 percent of home purchases were made by those who own one house or more, up from 31.3 percent in 2006 to 2007.

In August 2005, the government of late president Roh Moo-hyun, for whom current President Moon Jae-in served as chief of staff, announced the country’s toughest-ever measures to regulate speculative property investment, helping cool down the overheated real estate market.

Impeached President Park Geun-hye, Moon’s predecessor, abolished many of the 2005 regulations in an attempt to prop up the lackluster economy.

Regulations on mortgage financing were eased, and the benchmark interest rate was lowered to an all-time low of 1.25 percent in June last year, resulting in the record-breaking increase in household debts to purchase new homes with borrowed money.

Most of the 2005 regulations were restored through the Wednesday measures, such as the tightening of mortgage financing, the designating of overheated speculation areas and the heavier transfer tax on those who own more than two homes.