(Bloomberg) -- South Korea says it will boost available housing nationwide with a positive supply “shock” as President Moon Jae-in struggles to tame soaring home prices that are weighing on his approval ratings.
The government will ramp up supply by another 836,000 homes, including 323,000 in Seoul, by 2025 and speed up construction, according to a statement released Thursday by the Ministry of Land, Infrastructure and Transport.
The announcement builds upon previous plans to provide 1.27 million homes in Seoul and its adjacent cities. Moon last month pledged to introduce “extraordinary” measures to increase housing “beyond market expectations.”
Nationwide apartment prices jumped 11% in the past 12 months, with several cities seeing gains exceeding 20%, according to prices by KB Financial Group. Housing prices that are out of reach for many people are seen as one of the biggest drags on Moon's public support. The president has apologized for being unable to curb the nationwide rise while blaming the gains on low interest rates, abundant liquidity and demographic factors.
The new proposal is tantamount to a “supply shock,” Finance Minister Hong Nam-ki said in a separate statement Thursday.
The additional 836,000 units amount to two years' worth of usual housing supply, Hong said, adding that he is confident that the “massive increase” would firmly stabilize the market. The government will take action to calm markets should the plan stir speculative trade, he added.
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