BoK Warns of Rising Housing Market Risks in Seoul Area

2025-06-25 03:41 By Farida Husna 1 min. read

Persistent housing price increases in the Seoul metropolitan area could accelerate household debt and pose risks to South Korea’s financial stability, the Bank of Korea warned in its semi-annual report.

Despite overall financial system stability in early 2025, the central bank is closely monitoring the rapid rise in Seoul real estate prices, which are highly sensitive to economic changes.

The gap between metropolitan and non-metropolitan housing trends is widening, with regulations on multi-homeownership also pushing demand into Seoul’s preferred areas.

Policymakers cautioned that falling interest rates may intensify price pressures and household lending, stating that the risk of financial imbalances related to the housing market in Seoul has recently risen again.

While the risk index remains below COVID-era levels, the BoK stressed the need for macroprudential policies and confidence in stable housing supply.



News Stream
New BoK Governor Eyes Flexible Policy Amid Volatile Outlook
South Korea’s new central bank chief signaled a cautious policy stance as geopolitical tensions cloud the outlook. In his inauguration speech on Tuesday, Bank of Korea Governor Shin Hyun-song said policymakers must remain “cautious and flexible” as the Middle East conflict creates a supply shock, complicating both inflation and growth trajectories. He warned that rising oil prices linked to the Iran war are simultaneously pushing inflation higher while weighing on economic activity, a combination that raises risks for financial stability and market volatility. Shin emphasized the need to balance price stability with safeguarding the financial system amid these uncertainties. Having begun his four-year term on Tuesday, he is set to chair his first policy meeting on May 28, where markets will closely watch for signals on how the central bank plans to navigate an increasingly challenging environment.
2026-04-21
BoK Governor Nominee Vows Price Stability Amid Middle East Risks
Bank of Korea governor nominee Shin Hyun-song on Wednesday pledged to prioritize price stability as South Korea faces rising inflation risks and growth uncertainty linked to the Middle East conflict. At his confirmation hearing, Shin highlighted mounting price pressures and downside risks to growth, promising to balance inflation control, financial stability, and steady expansion. He cautioned inflation could climb in the coming months on higher oil prices and a weaker won, while growth may undershoot forecasts. “Given South Korea’s sensitivity to oil prices, I will place greater emphasis on price stability,” he said. Shin is set to succeed Rhee Chang-yong on April 20, ahead of the May rate decision, but offered no policy guidance. He noted direction will hinge on Middle East developments, with supply risks around the Strait of Hormuz.
2026-04-15
South Korea Holds Rates Amid Middle East Uncertainty
The Bank of Korea (BoK) held its policy interest rate steady at 2.5% for the seventh consecutive meeting in April 2026, in line with market expectations, as policymakers assessed the impact of the Iran war on domestic cost pressures and GDP growth. The decision came amid rising inflation and heightened volatility in financial and foreign exchange markets. Annual inflation accelerated to 2.2% in March 2026, up from 2.0% in the previous two months, marking the highest reading since last December and surpassing the central bank’s 2% target. Looking ahead, inflation is expected to rise to the mid- to upper-2% range due to a surge in global oil prices. CPI for this year is expected to exceed the February forecast of 2.2%, while core inflation is also likely to be somewhat higher than the previous forecast of 2.1%. Meanwhile, the growth rate for this year is expected to be below the February forecast of 2.0%.
2026-04-10