South Korea’s Moon Vows ‘Extraordinary’ Steps to Supply Homes

(Bloomberg) -- President Moon Jae-in said he’s planning “extraordinary” measures to increase housing in a bid to rein in soaring home prices, which have been one of the biggest drags on his public approval.

Speaking Monday at a New Year press conference, the South Korean president said the government will increase housing supply in a way that “far exceeds market expectation” by encouraging public sector participation and developing new land. Moon attributed the rise in home prices to low interest rates, abundant liquidity, and an increase in the number of households which led to demand outstripping supply.

“We focused on real estate speculation, but did not succeed in stabilizing the market,” he said, adding the new plan will be released before next month’s Lunar New Year holiday.

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South Korea’s population declined last year for the first time ever, but the number of households increased by 2.7% to a record 23 million as more people opted to live alone.

In a separate statement, the finance ministry said it was working on a series of development projects to increase housing and enhance public transportation for those unable to afford homes near their workplaces. About 83,000 homes will be provided this year in Seoul, including 24,000 public rental homes, it said in a statement.

A Gallup Korea survey released earlier this month showed Moon’s approval rating fell to a record low, with real estate policy being the number one reason for being critical of the president.

Moon’s administration has introduced a raft of property market regulations in the past years, but has failed to curb soaring prices in parts of the country, especially in large cities. Home prices in Seoul have jumped 30% since Moon took office in May 2017.

The president on Monday said the government would keep in place its series of measures to tamp down speculative purchases, which include tax hikes for multiple home owners and short-term sellers.