Bank of Korea "House Price Growth Expected to Slow, but Jeonse Prices May Rise"

[Image source=Yonhap News]

[Asia Economy Reporter Eunbyeol Kim] As the government continues to implement high-intensity measures to curb housing prices, the Bank of Korea has analyzed that while future housing sale prices may somewhat stabilize, jeonse prices could actually rise further.

According to data received on the 26th from the Bank of Korea by Yoo Kyung-jun, a member of the National Assembly's Planning and Finance Committee (United Future Party), the Bank of Korea submitted an official response to Yoo's written inquiry regarding the "Outlook on Housing Sale Prices and Jeonse Prices" containing this analysis.

Regarding housing sale prices, the Bank of Korea stated, "The upward trend is expected to slow down," adding, "The government's strong commitment to stabilizing the housing market and measures announced on June 17 and July 10 are expected to suppress housing purchase demand from multi-homeowners."

The Bank of Korea cited the Korea Real Estate Agency's survey results showing a decrease in the weekly apartment sale price increase rate after the announcement of the two measures as the basis for its outlook. The nationwide weekly apartment sale price increase rates (compared to the previous week) were ▲0.22% in the third week of June ▲0.13% in the fourth week ▲0.15% in the first week of July ▲0.15% in the second week ▲0.12% in the third week, generally showing a declining trend.

However, the Bank of Korea added a cautious note, stating, "Since the government policies have only recently been implemented, it is necessary to observe changes in economic agents' expectations more closely." Regarding jeonse prices, it evaluated that "factors driving prices up outweigh those pushing them down."

Looking ahead, the Bank of Korea explained that jeonse supply is expected to decrease due to landlords' preference for monthly rent, but jeonse demand is likely to remain high due to increased borrowing capacity for jeonse loans following interest rate cuts and waiting for subscription to new town supply housing.

In response, Yoo Kyung-jun said, "Due to the government's failure in real estate policy, citizens are being driven to worry about jeonse prices," adding, "If the Democratic Party forcibly passes a bill to strengthen the comprehensive real estate tax (종부세) in the temporary National Assembly, the tax burden will be passed on to tenants, worsening the jeonse crisis."

This content was produced with the assistance of AI translation services.