Seoul apartment prices regain momentum ahead of BOK meeting

[SEOUL] South Korea’s property market picked up steam, reversing from three straight weeks of moderating price increases in a signal that strengthens the case for the central bank to hold interest rates steady at next week’s policy meeting.

Apartment prices in Seoul climbed 0.2 per cent in the week to Nov 17, compared with a 0.17 per cent gain in the week ended Nov 10, according to Korea Real Estate Board (KREB) data released on Thursday (Nov 20). The latest figures underscore persistent demand for apartments in the capital, extending the rally to a 42nd consecutive week and taking year-to-date gains to 7.5 per cent.

The KREB said that the factors influencing the price rise include the redevelopment of old properties and growing demand from people seeking better living conditions and improved apartment facilities. They also noted that overall buyer inquiries have declined, while a wait-and-see approach continues to prevail, without providing further details.

The reversal comes despite a series of measures by President Lee Jae Myung’s administration aimed at cooling property prices, a key factor influencing the Bank of Korea’s (BOK) policy decisions as it considers whether to resume its rate-cutting cycle. While the central bank maintained an easing bias at its last meeting, some economists argue it is unlikely to deliver further cuts in the current cycle, citing the continued strength of the housing market.

The BOK’s next policy meeting is scheduled for Nov 27.

South Korea’s economy has shown resilience in the face of Donald Trump’s 15 per cent tariffs on imports from Korea, supported by strong semiconductor demand. A rebound in domestic consumption and a recovery in the construction sector are also providing tailwinds, with the Korea Development Institute forecasting 1.8 per cent growth for the economy next year.

BOK governor Rhee Chang Yong said that Seoul’s property prices were “way above” expectations, adding that authorities must assess the effectiveness of government measures to curb the overheated market. Rhee reiterated that monetary policy alone cannot rein in housing prices, while acknowledging that “ample liquidity would not help slow the fire” and emphasising the need for longer-term, supply-side policies.

The BOK has lowered rates four times since October 2024 but paused at its last three meetings amid concerns that cheaper borrowing could reignite a surge in mortgage loans. In keeping the key interest rate unchanged at 2.5 per cent last month, authorities cited rising financial stability risks from persistent housing price gains in Seoul.

The central bank has repeatedly warned that real estate-linked leverage poses one of the biggest threats to financial stability. To curb speculative demand, the government has unveiled housing measures, featuring tighter loan-to-value ratios in Greater Seoul, expanded speculative zone classifications, and lower mortgage caps for high-priced properties.

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President Lee also backed the central bank’s decision to hold rates, warning that cheaper borrowing costs could ignite further gains in housing prices. In a separate interview with Bloomberg, Lee described the housing market as “a ticking time bomb” and said cutting rates now could trigger a wider crisis. BLOOMBERG