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Rise in housing prices likely to slow following gov't regulation: BOK

Published: 21 Sep. 2025, 18:11

Apartments are seen from Mount Namsan in central Seoul on Sept. 18. [YONHAP]

The rise in Korea's housing prices is set to partially slow in the second half of 2025 following major regulatory measures implemented in June, a central bank report said Sunday.

According to the Bank of Korea, while apartment prices were expected to rise 6 percent by the end of December compared to the end of June, the government measures were estimated to reduce the increase by 1.6 to 2.1 percentage points.

In an effort to curb rising household debt and housing prices, the government imposed a 600 million-won (US$428,800) cap on mortgage loans for property purchases in the capital region in late June, while suspending home-backed loans for multiple-homeowners.

The volume of mortgage loans, which was originally projected to grow 5 percent over the period, will instead expand at a slower pace, by 1.2 to 1.6 percentage points, it added.

"Enhancing macroprudential policies had a meaningful impact in limiting the growth of apartment prices and mortgage loans, but it was not sufficient to restrain the overall upward trend," the report said.

The bank added that such macroprudential policies should take place ahead of rate cuts to have a more meaningful impact on housing prices and household debt.

"If rate cuts are carried out without stronger macroprudential policies, market participants may view them as a passive stance on financial stability. This could fuel expectations of further housing price hikes while raising risks to financial stability posed by the cuts," it added.

Yonhap