Its central bank may break ranks with G-20 partners and raise interest rates
Would-be home owner Hwang Min-soon is the sort of bullish property buyer who may prompt the central bank to break ranks with the G-20 and raise interest rates.
She is considering the purchase of a 104 square metre apartment in Seoul, where property prices have defied the global financial crisis to rise 20 per cent since the start of the year. When asked the sort of return she expected on her investment, Ms Hwang replied: ‘In the next two to three years, I’d say 70 to 80 million won (S$84,000 to S$96,000).’ That would be in the order of 30 per cent.
Property prices in South Korea are rising rapidly and, since urban South Koreans show no sign of losing their voracious appetite for property, so, more worryingly, are mortgages.
The central bank slashed its interest rates to a record low of 2 per cent to support the economy during the crisis. But it is now highlighting the property binge as reason enough to start raising them, even if that means breaking ranks with its G-20 partners, who have pledged to keep stimulus measures in place. Financial regulators are also ready to impose more controls on home loans. Continue reading
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