Land minister says housing price gains slowing, rate hike could stabilize market

Minister of Land, Infrastructure and Transport Hong Ji-sun said the pace of housing price increases has been slowing and that a year-end interest rate hike could help stabilize the real estate market.

Hong made the remarks Friday at the National Assembly land and transport committee's comprehensive national audit, responding to a question from People Power Party lawmaker Eom Tae-young about Seoul Mayor Oh Se-hoon's outlook on rising home prices. "For now, the pace of housing price increases is slowing," Hong said.

"There are forecasts that interest rates, including mortgage rates, will rise toward year-end, and if that happens, I think the housing market will stabilize," she added.

Hong said the ministry is also preparing measures to address rising apartment prices in the Greater Seoul area. In response to a related question from People Power Party lawmaker Kang Dae-sik, she said the ministry is "preparing responses to various changes, including sharp falls and sharp rises."

Hong's remarks suggest the government recognizes that additional action may be needed depending on market conditions, even as price growth slows. With both rate-driven demand shifts and supply shortages raised simultaneously, the real estate market's stability hinges not only on financial conditions but also on how aggressively supply expansion policies are pursued.

On the trend of shrinking jeonse supply and a growing share of monthly rent, Hong pointed to a shortage of housing in the Greater Seoul area as the primary cause.

Asked by People Power Party lawmaker Shin Seong-beom about the reasons behind the rise in monthly rent, Hong said: "The most important factor is that housing supply in the Greater Seoul area is insufficient — supply itself cannot keep up with demand, and rental inventory is also shrinking."

She added that the ministry would work to boost housing supply through measures including small non-apartment units, purchase-based public rental housing and the revitalization of long-term private rental housing.

Hong also indicated that the decline in jeonse and monthly rent listings is not solely the result of government real estate regulations.

When Democratic Party of Korea lawmaker Jeong Il-young attributed the drop in jeonse supply to tighter regulations on private rental operators and stricter owner-occupancy requirements, Hong said: "Regulated zones and land transaction permit zones are limited to Seoul and parts of Gyeonggi Province. The problem is that jeonse and monthly rent listings are also declining and monthly rent is worsening in regional areas where no such regulations exist."

However, Hong acknowledged that the ministry does not have specific data on how many jeonse and monthly rent units have left the market as a result of tightened owner-occupancy requirements.

When People Power Party lawmaker Yoo Eui-dong asked whether the ministry had calculated the scale of the impact, Hong said: "We have not identified any statistics specifically on that matter."

Hong cited sluggish private-sector ground-breakings as the reason this year's housing supply targets are likely to be missed.

When People Power Party lawmaker Jeong Hee-yong noted that this year's housing supply figures are expected to fall short of targets, Hong said: "It seems the publicly driven volume will be achievable to some degree, but the private-sector volume is not being met properly."

"We have a five-year plan in place," she added. "We will do our best to make up for it next year."

Earlier, on Oct. 16, the Ministry of Land, Infrastructure and Transport projected in a joint housing supply briefing with the Office for Government Policy Coordination that between 218,000 and 235,000 units would break ground by year-end — equivalent to 81 to 88 percent of the original target.

Hong also said the ministry would establish its own verification process for selecting special supply recipients, rather than relying solely on the judgment of recommending institutions.