South Korea's homebuyers buoyed by eased mortgage curbs

After moving six times in 10 years, chemical researcher Choi Youn-ho is hopeful easier mortgage rules will finally allow him to buy a home on the outskirts of Seoul for his family of four.

"I'm sick and tired of finding a new home, packing and moving every two years, whenever the lease contract expires," said Choi, who works at a chemical trading firm and had a 24 per cent increase in rent in May when he moved into a new three-bedroom apartment. "I can get a bigger loan now; it may be the time to finally buy a home rather than swallowing this crazy rent rise."

South Korea relaxed banks' mortgage restrictions this month as Finance Minister Choi Kyung-hwan, appointed last month, seeks to revive a property market in Asia's fourth-largest economy, boost growth and stimulate domestic consumption.

A nationwide weekly apartment purchase price index hit a six-year high on August 18, according to Kookmin Bank data.

The new policies were "stronger than people had expected and are thawing the market", said Shim Gyo-un, a real estate department professor at Konkuk University. "People who have been burdened by surging rents now are turning to buying as they have easier access to mortgages, and they feel bank loans are cheaper than rents."

The government increased the loan limit for homebuyers to 70 per cent of a property's value from as low as 50 per cent, starting this month. Borrowers will be allowed to use 60 per cent of their income for mortgage payments, up from 50 per cent for homes in Seoul, which had the most stringent lending rules.