Trend: house prices fell slightly by 0.72% y-o-y in Q3 2018

South Korea’s housing market remains weak, amidst the introduction of very severe anti-speculative measures and the oversupply of housing. House prices fell slightly by 0.72% during the year to Q3 2018, from a y-o-y decline of 0.66% in Q3 2017. During the latest quarter, house prices declined 1.03% from the previous quarter.

Analysis: housing restraint, economic stimulus ahead.   

Elected on the promise of ending cosy ties between business and government, South Korea's new government has launched a fiscal plan that President Moon Jae-in has called 'a complete paradigm shift' based on US$9.85 billion extra spending, especially on social security, health, and small businesses, which will raise growth to 3%.

High housing costs are a political issue, so the government is targeting the "overheated speculative zone", comprised of the capital Seoul (all 25 districts) and two other areas -- Gwacheon and Sejong City. For those areas they've re-introduced increased capital gains tax (CGT) on property investors, originally introduced 2005-2014. Investors who own two houses pays an extra 10% in capital gains tax upon the sale of a property. Three-house owners can expect an extra 20% tax, in addition to baseline CGT of between 6-40%, depending on the size of the gain and the holding period.

Rents, rental yields: data unavailable in S. Korea

Recent news. South Korea’s economy grew by 2% in Q3 2018 from a year earlier, down from the previous quarter’s 2.8% growth, as a decline in domestic investment offset the positive effects from government stimulus and robust exports.