Markets widely expect the Bank of Korea to raise rates on Thursday, a move
likely to cool the Korean property market. Redevelopment and reconstruction
projects, which typically require large resettlement loans and run about a
decade, would be hit directly—most relocation loans are floating-rate, so a hike
could immediately raise additional contribution payments and delay projects. Nam
Hyuk-woo, real estate researcher at Woori Bank, warned that a rate rise combined
with banks tightening lending and cutting quotas would create a double squeeze:
weaker purchasing power for genuine buyers and wider bank lending spreads.
High-priced, investor-concentrated areas along the Han River and in Gangnam are
also likely to be affected.
