South Korea touts progress in cooling real estate ahead of central bank meeting

SOUTH Korea touted progress in cooling increases in home prices and reiterated a pledge to boost housing supply just days before the central bank meets to set policy, with a decision that will largely hinge on how it views that market.

Outlining headway made so far as a result of housing policies announced in August, the Finance Ministry on Tuesday (Oct 8) highlighted a decline in Seoul apartment transactions and moderating growth in prices since that point. It also said it will crack down on any illegal market practices that could inflate housing prices.

The government “will continue to be vigilant in managing market liquidity and household loans”, the ministry said in a statement.

Most economists expect the Bank of Korea (BOK) to conduct a policy pivot with a quarter-percentage-point rate cut when its board convenes on Friday.

With inflation having cooled steadily this year, the central bank has cited concerns about an overheated housing market in Seoul for keeping its benchmark rate at a restrictive 3.5 per cent in recent months.

Signs emerged that Seoul’s property market was cooling in September, and inflation dipped below the BOK target of 2 per cent that same month, helping to fulfil major criteria for the BOK to proceed with a pivot in order to focus more on shoring up consumption.

SEE ALSO

Bank of Korea eyes first policy pivot in years on signs of cooling property

South Korea’s inflation cools more than expected as rate cut talk grows

Seoul’s apartment market cools more ahead of Bank of Korea rate decision

“Despite the BOK’s hawkish rhetoric and lingering concerns, we think the balance of policy considerations will likely nudge the board towards the beginning of its easing cycle,” Jin Choi, an HSBC Bank economist, said in a note on Monday.

“Recent green shoots, in part from the tightening of macroprudential measures by the government, are also likely to help.”