South Korea's housing price hikes are expected to moderate in Seoul and several nearby areas due to a rise in new homes and lending regulations, the central bank's chief said Saturday.
"An increase in the housing supply and regulations on property markets and loans will help stabilize the housing prices. This will likely slow the growth of home prices," Bank of Korea (BOK) Gov. Lee Ju-yeol, nominated for a second term, said in a report to lawmakers ahead of his confirmation hearing.
Bank of Korea (BOK) Gov. Lee Ju-yeol (Yonhap)
"Monetary policy has far-reaching impact on the economy. So if (the central bank) responds to rising home prices with a rate hike, it could have a negative effect on the real economy, including employment and consumption," he said.
Earlier this month, President Moon Jae-in announced a decision to retain Lee, 66, for another four-year term as the chief of the BOK. His confirmation hearing is slated for Wednesday.
It came at a critical time when the South Korean economy is grappling with mounting household debt and weak domestic demand amid prospects for US rate increases.
South Korea's housing prices in Seoul, the capital city with a population of 10 million, rose 0.9 percent on-month in February, above an average 0.2 percent rise across the country.
The country's household debt stood at 1,450.9 trillion won
(US$1.34 trillion) at the end of last year, up 8.1 percent from a year earlier, according to BOK data.
The BOK froze its key rate for the second straight month in February amid signs of economic growth after hiking it for the first time in more than six years in November last year.
Some market observers said Lee prefers the tightening of monetary policy amid prospects that the US Federal Reserve will likely speed up rate hikes.
But he stressed the importance of a prudent approach in consideration of various economic and market conditions.
Lee said, meanwhile, when it comes to cryptocurrency, it is important to find ways to protect consumers and prevent the currency-related illegal acts.
South Korea, home to one of the world's biggest bitcoin exchanges, has banned anonymous trading of cryptocurrencies and requires financial companies to properly verify their customers.
Lee called for prudence in drawing up a bill to regulate cryptocurrencies as it is hard to effectively control transactions of cryptocurrencies without international cooperation. (Yonhap)