Bank of Korea Governor Says Policy Lending Pushes Up Housing Prices, More Supply Needed

Bank of Korea Governor Lee Chang-yong pointed out that policy financing is causing real estate prices to rise, and called for measures to be taken through an expansion of housing supply.
At a parliamentary audit held by the Strategy and Finance Committee in 2018, Governor Lee said, "Since policy financing has the effect of pushing up (real estate) prices, we need to shift to measures that increase supply and provide it to the poor."
Lee responded to a remark made by Democratic Party of Korea lawmaker Yoon Ho-jung on the same day that the expansion of policy-based financing had created a vicious cycle that led to rising housing prices.
However, he refuted the view that the side effects of policy finance are a problem limited to a particular administration or period.
"The chain reaction of the expansion of policy financing leading to housing prices is not limited to the current or previous administrations," Lee said.
"It is not a phenomenon that has arisen in the short term, but it has been going on for over 10 years," he said. "Obviously, it started out with the aim of helping newlywed couples in difficulty, but now it is becoming more and more difficult to find a job.
"The current situation has gone beyond that and is causing a vicious circle in the real estate market."