Growth in household debt, which had showed signs of slowing early this year, is surging again, fueling a property boom stemming from the expectation of an economic recovery with the advent of the new administration.
Banking industry sources said Sunday that outstanding household loans increased by W6 trillion in May, compared to W4.6 trillion a month earlier (US$1=W1,123).
To rein in soaring household debts, the government tightened regulations for obtaining bank loans in August last year and household loans seemed to decrease until January.
But they soon picked up, rising to W2.9 trillion in February and W3 trillion in March.
Optimism over the new Moon Jae-in administration’s economic policies has fueled the surge in real estate prices, prompting more and more Koreans to borrow to fund property flipping.
The surge in real estate prices is most apparent in Seoul’s affluent Gangnam area and the trend has been spreading to satellite cities.