South Korea expands housing supply and eases loans for young buyers

South Korea announced a fresh package of measures on Thursday to cool its housing market, increasing financial support for construction projects and relaxing borrowing rules for young homebuyers.

The plan, unveiled by the Financial Services Commission (FSC), aims to "stabilise the property market by stimulating housing supply and through a comprehensive financial package for young people and those with actual demand," the regulator said in a statement.

Under the new measures, policy support for construction project financing will rise to at least 47.8 trillion won ($33.72 billion), up from a previously planned 26.3 trillion won. The increase is intended to accelerate the delivery of new homes.

For young buyers and newlyweds purchasing a home to live in, the FSC will introduce new policy loans and other financial assistance. At the same time, restrictions on speculative demand will be maintained or tightened.

The move comes as President Lee Jae Myung's approval rating slipped to a one-month low of 51% in a Gallup Korea survey on July 24, with housing policy cited as a key factor. House prices in June rose by the most since November 2021.

South Korea, one of the world's most indebted countries, has long used strict borrowing rules to curb household debt. The FSC said it would manage debt growth at around 3% this year, up from a previous target of 1.5%, reflecting the need to support genuine buyers while keeping speculation in check.

Earlier this month, the government proposed higher taxes on wealthy homeowners as part of broader efforts to address affordability concerns.