South Korean leader Moon Jae-in ramped up his commitment to rein in rising property prices Tuesday, pledging an “endless” stream of stronger measures if soaring housing prices in some neighborhoods don’t cool.
“Excess liquidity and low rates around the globe are behind the rise in property prices, drawing speculative money into real estate and causing large price jumps in many countries,” Moon said. “South Korea is showing the same trend.“
Moon’s comments come ahead of a policy decision by the Bank of Korea later this week, with real estate price surges among reasons supporting the case for the central bank to hold off on further rate cuts to support the economy. The remarks suggest that Moon will prioritize his drive to make housing more affordable over the risk that measures to curb property price gains could also hurt the economy.
The Moon administration has launched a raft of property-related measures since taking office in 2017, with the latest in December dubbed “draconian” by CLSA. South Korea’s nationwide home prices have remained stable, but some regions like Seoul’s affluent Gangnam district have shot up by more than 20% during Moon’s tenure.
While the steps have yet to reel in all the pockets of price gains, some economists say they are contributing to a construction slump that was the main drag on economic growth in the third quarter.
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The remarks are likely to be closely scrutinized by analysts trying to assess where Moon stands on monetary policy and how he might reconfigure the central bank’s board this year. Five members will be replaced or have their terms renewed. Economists are divided over whether Moon will opt to boost the presence of dovish or hawkish members.