South Korea unveils package to boost housing supply, support young buyers

South Korea announced on Thursday an ambitious package to bolster housing provision and aid young homebuyers, as part of its strategy to stabilize the overheated property market. President Lee Jae Myung's government unveiled the financial support measures earlier this month, coinciding with a drop in his approval ratings due to rising house prices and market instability.

The Financial Services Commission (FSC) highlighted that it would increase policy backing for construction financing to 47.8 trillion won (US$33.72 billion) from the originally planned 26.3 trillion won, in an effort to increase housing supply. The FSC also introduced financial assistance programs, such as new policy loans, for young individuals and newlyweds purchasing homes for residence, while retaining or tightening restrictions on speculative demand.

South Korea, recognized as one of the world's most indebted nations, has stringent borrowing rules to curb household debt. The FSC aspires to maintain debt growth around 3 percent this year, an increase from the previous objective of 1.5 percent. President Lee's approval ratings plummeted to a one-month low of 51 percent in a Gallup Korea survey on July 24, with housing market policies being one of the primary reasons, following June's record house price surge since November 2021.