South Korean President Lee says housing instability caused by real estate speculation

Seoul, July 1 (IANS) President Lee Jae Myung said Tuesday liquidity pumped into speculative investment on homes has caused housing instability, stressing the need to diversify investment options to ease heavy investment reliance on property.

"As investment options have been largely limited to housing or real estate, homes have repeatedly become tools for investment or speculation, leading to housing instability," Lee told a Cabinet meeting.

Lee underscored the importance of maintaining the current momentum in the stock and financial markets to broaden investment opportunities for individuals, Yonhap news agency reported.

"Fortunately, with the recent normalisation of the stock and financial markets, alternative investment options are gradually gaining ground," he said. "I believe it's important that we maintain this positive trend."

Last Friday, the Financial Services Commission announced all local lenders would be required to sharply lower their household lending. In addition, mortgage-backed loans for home purchases in the capital area will be capped at 600 million won (US$442,000) starting this week.

The first real estate policy under the Lee administration came amid a sharp rise in household debt and soaring home prices in Seoul.

The presidential office said it is closely monitoring the housing market to assess the impact of the tighter lending rules.

"The market is currently being monitored to assess how it is responding to the lending rules," presidential spokesperson Kang Yu-jung told reporters, noting that reviews are also underway on the supply side in response to demand for new homes.

--IANS

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