(SEOUL) South Korea said yesterday it will unveil measures aimed at boosting housing transactions on Thursday, sending shares of home builders higher.
The Ministry of Land, Transport and Maritime Affairs confirmed measures aimed at 'normalising housing transactions' would be discussed at a weekly emergency economic meeting to be chaired by the president on Thursday.
House prices have been rising over a year but sales transactions have been shrinking partly because of strict restrictions on mortgage borrowings imposed in recent years.
Ko Heung-kil, the chief of the ruling Grand National Party's policy committee, told a meeting of senior party members earlier in the day that the government was preparing to announce measures aimed at boosting home transactions.
Mr Ko's comments had sent the construction industry sub-index 2.9 per cent higher, even as the the broader index fell 0.4 per cent.
It was not clear if the measures would be aimed at helping boosting sales transactions of existing homes or new homes or both.
Apartment prices across South Korea set their first weekly fall in 16 months last week, data from the country's largest lender, Kookmin Bank, showed on Friday.
Home prices grew 3 per cent in June from a year earlier, above the annual consumer inflation rate of 2.6 per cent for the month but slowing for a second consecutive month, Kookmin Bank data showed.
But an index from the bank that measures activity in home transactions fell last month to an 18-month low of 0.2 from 0.3 in May and from as high as 1.3 set in September 2009.
South Korea has on several occasions imposed strict limits on the maximum amount of mortgage loans that home owners can borrow on the basis of the market prices of the homes or borrowers' annual income.
Local media and some politicians have demanded the restrictions be eased, but financial authorities have repeatedly said they would not loosen them drastically, mainly out of fear that already high household borrowing could flare up again. -- Reuters
Source: Business Times, 20 Jul 2010