(Bloomberg) -- Price growth for apartments in Seoul slowed for a second week, supporting the case for the central bank to consider a policy pivot as early as next month.
Apartment prices in the capital increased 0.12% from a week earlier, marking the slowest pace of growth since early June, according to data released Thursday by the Korea Real Estate Board. The latest result compared with a 0.16% clip recorded last week. For the entire nation, price growth slowed to 0.04% from 0.05%.
Home transactions slowed with the Chuseok holidays earlier this month and also due to the impact from tighter government restrictions on mortgages, the board said in a statement.
Rising prices for homes in Seoul have convinced the Bank of Korea to hold its benchmark rate at a restrictive 3.5% in recent months even as speculation among economists builds over the potential for a rate cut. Ahead of their next meeting on Oct. 11, board members are scrutinizing price data to determine if growth in household loans will slow enough to ease their concerns about potential financial imbalances.
Apartments are the most sought-after type of residential real estate among South Koreans, and their prices have recovered at a hotter-than-expected pace partly on speculation interest expenses will start to decline if the central bank cuts its rate.
On Thursday, BOK board member Chang Yongsung flagged expectations that housing price growth would start to moderate due to government measures announced last month to rein in the market. Separately, on Wednesday another member Shin Sung Hwan told reporters that the BOK could proceed with a pivot even without seeing definite signs that the housing market is cooling. He expressed concerns about lackluster domestic consumption.
Still, both highlighted persisting concerns about rising household debt threatening financial stability as the country has one of the highest household debt burdens in the world.
Meanwhile, South Korea’s Finance Minister Choi Sang-mok said Wednesday he hoped for a “wise decision” by the BOK in October. He said he would prioritize boosting consumption over curbing household debt for the moment as a government official.
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