Due to the ongoing government intervention to curb rising house prices and cool down the overheated housing market, South Korea’s housing starts in number of buildings for the first two months of 2018 significantly decreased 36.4% to 9,132 buildings while that in number of units decreased 20.8% to 49,778 units. Housing permits in number of buildings and units for the same period of 2018 also decreased 20.2% and 9.4% respectively to 13,278 buildings and 81,092 units from a year earlier 16,634 buildings and 89,480 units.
Due to the current difficulty in getting building permits for wood structure caused by enhanced requirement on seismic design for small scaled buildings and sound floor for Dagagu housing in coupled with the overall housing market decrease, the number of wood building starts and permits for the first two months of 2018 decreased 34.2% to 1,271 buildings and 22.9% to 1,685 buildings respectively while those for total floor areas decreased 35.7% to 115,800 m2 and 27.5% to 158,780 m2 respectively from the same period of 2017.
The South Korean government has churned out a series of measures to tighten mortgage rules for owners of multiple homes as part of efforts to ensure mounting household debt does not hurt the nation’s economy.
South Korea’s household lending by banks rose at the fastest clip in four months in March to 776.3 trillion won (US$728.6 billion) on increased home transactions ahead of the implementation of government-led measures to cool down the overheated real estate market.
The central bank said a growing number of people borrowed money to buy houses in March before the new debt service ratio (DSR) rules went into effect for a trial run on March 26. As a result, transactions of apartments in the capital city of Seoul reached 14,000 in March, up sharply from 7,000 deals a year ago.
Under the tightened DSR guidelines, lenders will check borrower’s monthly debt obligations, which include overdraft bank accounts and credit card loans, making it harder for people to take out fresh loans.