South Korea’s housing market divide is expected to ease this year as tighter government regulations cool price gains in the country's most populated regions, according to a report published Tuesday by a think tank under KB Financial Group.
The domestic housing market saw widening regional disparities last year, with home prices in Greater Seoul, which includes Incheon and Gyeonggi Province, surging sharply compared with other regions, the report said.
It projects that the residential property market will enter a correction phase this year following tighter regulations, including stricter lending rules, the designation of regulated areas and higher taxes.
During the phase, prices in parts of Greater Seoul are expected to decline, while non-capital regions are likely to see a limited recovery, narrowing the regional market divide.
"While the housing market has recently shown signs of cooling, the regional divide continues and risk factors such as housing supply shortages and rising construction costs linger,” Kang Min-seok, a researcher at the think tank, said.
Kang highlighted that policy direction is likely to be a key variable shaping the housing market this year.
"Above all, government policies, including expanding housing supply in Greater Seoul and real estate-related taxes, will be key factors determining the market going forward," he said.
KB Financial has published annual real estate reports since 2018 based on KB Kookmin Bank’s long-running housing price poll, first launched in 1986. This year's report was based on a survey of 700 respondents, including real estate experts, licensed real estate agents and private bankers.
silverstar@heraldcorp.com
