Overheated home market cools off following tightened loan curbs: data

SEOUL, July 4 (Yonhap) -- Overheated demand for apartments in Seoul has weakened for the first time in nearly two months following the government's announcement of aggressive loan restrictions last week, data showed Friday.

According to the state-run Korea Real Estate Board, the weekly apartment purchase sentiment index for the capital fell to 103.7 as of Monday, down from 104.2 a week earlier, marking the first decline since late April.

The index measures the demand to supply ratio in the housing market. A reading above 100 indicates there are more buyers than sellers, suggesting upward pressure on prices.

The index for the southeastern Seoul region, including Gangnam, Seocho, Songpa and Gangdong districts, came to 108.8, down 2.4 points from the previous week. The region, bellwether of home prices in Seoul, has led the city's recent price rally.

The weakened demand came after the government introduced stricter mortgage rules, capping home-backed loans at 600 million won (US$442,000), to cool down the overheated prices of homes in the capital region.

"The recent rapid price surge has likely reached a short-term peak," said Park Won-gap, a real estate analyst at KB Kookmin Bank. "Anxiety over potentially getting a bad deal in such a heated market has also apparently contributed to the decline in demand."

The government is widely expected to introduce additional regulation regarding the housing market, as President Lee Jae Myung has stressed that his administration seeks to curb speculation in the real estate market.

"The lending rules are just a taste of what may come as there are many other real estate regulations available," Lee said Thursday during a press conference marking his first month in office.

odissy@yna.co.kr
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