South Korea announces housing supply boost and tax reforms

South Korea has introduced a new package of measures to stabilize its housing market by increasing construction financing and providing support for young homebuyers. The Financial Services Commission (FSC) announced it will raise policy support for construction projects to at least 47.8 trillion won (US$33.72 billion), up from a previously planned 26.3 trillion won.

To assist young people and newlyweds, the government is introducing new policy loans for those purchasing primary residences, while maintaining or tightening restrictions on speculative demand. The FSC aims to manage household debt growth at approximately 3 per cent this year. These actions follow President Lee Jae-myung’s warnings regarding a potential real estate bubble that could lead to economic stagnation.

Simultaneously, proposed real estate tax reforms are undergoing legislative review. Lawmaker Kim Min-seok has called for supplemental deliberation to fine-tune the execution of these tax changes to avoid accidental asset sell-offs or disruptions to commercial real estate markets. The policy shifts come as President Lee faces declining approval ratings amid rising house prices and market volatility.