Housing Prices Uncertain Despite Real Estate Measures... "Favorable Winds for Banks and Construction Stocks" [Weekend Money]

Household Loan Cap Eased, Banks Anticipate Breathing Room
Shorter Construction Timelines for Public Land to Attract Builders
Limited Immediate Effect on Housing Prices, but Markets Already Responding

The government’s real estate supply and financial measures announced on August 13 are expected to have a favorable impact on the banking and construction sectors. The increased supply volume means more contracts for construction companies, and the relaxation of loan regulations is projected to expand banks’ lending capacity.

Direction of Loan Regulation Easing: "Upward Revision of Bank Loan Growth Projections"

The most notable change in the new measures is the target for managing the total amount of household loans. Financial authorities raised this year’s household debt growth target from the previous 1.5% to 3.0%. This higher target means that banks will be able to lend more money within 2026. Home supply-related mortgage loans, such as bridge loans, intermediate payment loans, and final payment loans, have been excluded entirely from the scope of total loan volume management.

Nah Minwook, an analyst at DB Financial Investment, predicted, "Assuming the household loan volume cap, the remaining household loan capacity for banks in the second half of the year will be between 400 billion and 1.5 trillion won per bank."

However, the banks have already exceeded their annual lending targets in the first half of the year. For the four major banks, the annual target was roughly 800 billion to 900 billion won, but many of them surpassed this figure in the first half.

Despite this, Analyst Nah appreciated the shift in policy direction itself. He said, "Given the household loan capacity in the second half, it will be difficult to make a meaningful upward revision to this year’s earnings forecasts immediately, but the relaxation of what had been a conservative total loan cap is positive." He cited the shift towards loosening rather than tightening regulations, as well as the possibility that targets could be raised again from next year onward. Reflecting this, Analyst Nah adjusted the outlook for the average annual loan growth rate of banks to 5.4%.

The new policy also includes mechanisms to prevent increased lending from fueling speculative demand. Existing loan limit regulations, such as LTV and DSR, remain in place, but guarantees for jeonse loans to non-resident single-homeowners have been newly added to the restricted category. Furthermore, for mortgage loans with lump-sum repayment at maturity or high LTV ratios, capital regulations assigning higher risk weights will take effect from 2027.

Analyst Nah also commented on this aspect: "As banks maintain a certain buffer relative to their target Common Equity Tier 1 (CET1) ratios, the additional capital burden from household sector countercyclical capital buffers should be limited." In other words, the measures increase lending capacity but require more capital for riskier loans, thus achieving a balance.

Limited Immediate Impact on Housing Prices... But a Tailwind for Construction Orders

The calculations for construction are somewhat different. With this set of measures, the total amount of housing to be supplied in the Seoul metropolitan area by 2030—combining last September’s and this January’s supply packages—exceeds 1.62 million units, of which 230,000 units have been newly added in this round. The government will unlock greenbelt areas such as Duksu in Namyangju and Yeomchang Park in Gangseo, Seoul, to provide 27,000 priority units, and plans to announce additional sites totaling 73,000 units by the end of the year.

Shin Donghyun, analyst at Hyundai Motor Securities, judged, "These supply measures will have little immediate impact on home prices." He said that legal revisions are needed to shorten construction start times, and moving to actual occupancy will take even longer. Instead, he drew attention to the order volumes construction companies stand to win.

The key factor to watch is not the supply volume, but the speed. The government aims to reduce the period from land designation to construction start from 68 months to 37 months. By running approval, compensation, and land development procedures in parallel, the government plans to halve the timeline.

The logic behind public housing projects has also changed. Previously, construction companies bore the brunt of any rise in construction costs for public housing, making these projects less attractive. However, since 2025, more cases have been approved where escalation clauses (allowing construction costs to increase if prices rise) are actually applied in private participation projects with Korea Land & Housing Corporation (LH).

Analyst Shin explained, "In these projects, private builders handle design, construction, and sales, while LH acts as the project owner, so construction companies bear no risk of unsold units." This is a structure where builders can expect profit margins similar to those of regular private contracts. He further predicted, "Mid-sized construction firms stand to benefit most, as they can act as lead firms in small projects and take part as non-lead contractors in larger ones."

This content was produced with the assistance of AI translation services.