The Magazine for Asian Investors
According to the South Korean central bank’s research report, residential property prices in South Korea are likely to fall by 2.8% within two years if the policy rate is raised to the full rate.
Other variables, such as the size of new homes and mortgage rules, can also affect housing prices.
The Bank of Korea’s research focuses exclusively on analyzing the price effects of changes in policy rates.
The report comes as the price of apartments in Seoul fell sharply in the last week of July in nearly three years, while nationwide transaction volume fell to a record low in the first half of the year.
The Federal Reserve raised its benchmark interest rate by half a percentage point to 2.25% on July 13, following an earlier increase of five points by 25 basis points.
It is widely expected that the BOK will raise interest rates a few more times this year until the policy rate reaches 2.75% or 3%.