Since entering office, President Moon has introduced more than a dozen property cooling measures ranging from tighter lending rules and higher taxes on luxury homes to putting a pre-sale price cap on certain Seoul apartments which have worked – mostly. Nationwide household debt has moderated for 11 straight quarters as of 3Q 2019 while property price appreciation has slowed; nationwide prices have only appreciated 3.5% in the 2.5 years Moon has been in office. However, certain affluent neighborhoods in Seoul continue to buck the trend with prices having risen 20% over the same period.

Our thoughts: While the measures have mostly worked as intended, they have had a negative effect on the country’s economy with latest GDP results showing a 0.4% growth in 3Q; slowing construction activity was the biggest down weight shaving off 90bps from the reading. Nonetheless, the overhang of more price curbs will continue to shroud the residential market in 2020 given the government’s pledge to continue curbing prices; even at the expense of some economic expansion.