South Korea

South Korean house prices bounced back in 2011, after a slow second half of 2010. Housing starts and transaction volumes were strongly up.  House prices rose by 6.86% (2.60% in real terms) during 2011, according to the Korean Statistical Information Service (KOSIS). The Seoul house price index was up by 0.29% (-3.72% in real terms) during 2011, less than the national house price index.

The government has unveiled another set of measures in helping the housing market, including cutting the levy on profits made from home sales by multiple homeowners from 50% - 60% to 6% - 35%. This is the third installment of housing market boosting measures by the government, following the slashing of home purchase taxes in March 2011 and the easing of real estate lending restrictions in August 2010.

The key rate interest rate has been unchanged at 3.25 from June 2011. The rate has attracted borrowers, with 2011 apartment building sales rising 41.8% to 285,000 units. The measures also helped construction permits rise 42.2% to 549,594 permits, according to the Ministry of Land, Transport and Maritime Affairs (MLTM).  Household debt rose to 12.7% during the year to March 2011.

South Korea’s economic growth slowed to 3.6% in 2011, after 6.16% in 2011.  Inflation remains high at 4.16%.

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