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Can households juice the property market?

Kim Tong-hyung
The country’s expanding inventory of unsold new homes, such as the Lotte Castle apartments in Mapo, Seoul, has been the most visible symptom of the ailing property market, which continues to be troubled by a sharp decline in transactions. The government is looking to ease the country’s debt-to-income ratio (DTI) rule, which restricts homebuyers’ borrowing in proportion to their annual income, to breathe new life into the market, but some critics believe the efforts will be futile.

The country’s expanding inventory of unsold new homes, such as the Lotte Castle apartments in Mapo, Seoul, has been the most visible symptom of the ailing property market, which continues to be troubled by a sharp decline in transactions. The government is looking to ease the country’s debt-to-income ratio (DTI) rule, which restricts homebuyers’ borrowing in proportion to their annual income, to breathe new life into the market, but some critics believe the efforts will be futile.


The country’s slumping housing market is proving to be a drag on the economy, but this isn’t stopping policymakers from making Herculean efforts to delay what appears to be the inevitable.



And again, it’s the debt-loaded households that are expected to provide the jolt for inflating the flattened home prices. 
But can Korean families, already suffering from a severe hangover following their borrowing binge of previous years, continue to fuel the speculative demand for houses like they did in the past? 

Government officials, who are about to ease the debt-to-income ratio (DTI) rule, which restricts homebuyers’ borrowing in proportion to their annual income, hope the answer is yes. 

Statistics, which show that the country’s total household debt now stands over 700 trillion won (about $586 billion) aren’t exactly inspiring confidence. 

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