Seoul: Experiences of high inflation have led to a surge in housing demand, prompting the government to consider stabilizing core inflation by focusing on demand factors, a central bank report revealed.
According to Yonhap News Agency, a report authored by Choi Young-jun, a researcher at the Bank of Korea (BOK), indicates that real estate has become a favored hedge against inflationary pressures in South Korea. The report highlights that a 1 percentage-point increase in core inflation could raise the likelihood of home purchases among people in their 30s by 7.4 percentage points.
Choi explained, "Experiencing high inflation in the past served as a crucial factor for people to buy homes by resorting to excessive borrowing."
He further emphasized, "Strong housing demand among those in their 30s and younger is a characteristic of our society, which highlights a need for authorities to make price stabilization efforts by putting a focus on the demand side in order to prevent overheating risks of the property market."
The report also notes that housing constitutes over 70 percent of the total assets of South Korean households on average, based on government data.