Korea's Housing Market Faces Uncertain Future Amidst Soaring Interest Rates and Falling Prices

Korea’s household debt-to-GDP ratio was the highest in Asia in the third quarter of last year, according to a report by the Institute of International Finance released on Sunday. Korea's ratio reached 105 percent, followed by Hong Kong at 90 percent, Thailand at 80 percent, Malaysia at 76 percent, and China at 66 percent.

This marks the third consecutive quarter that Korea has topped the list. The report analyzed household debt ratios in 34 countries and found that Korea's ratio is higher than the average of 39 advanced economies and 27 emerging markets. Korea is the only Asian country with a household debt ratio exceeding 100 percent.

The report attributes the high ratio to the sharp increase in interest rates. Rising interest rates make it more difficult for households to repay their debts. This can lead to financial instability and pose risks to the overall economy.

The Bank of Korea froze the key interest rate at 3.5 percent last week, its third consecutive freeze. The central bank decided to keep rates steady due to mounting financial anxieties, like the recent default of Legoland Korea developer and growing concerns over the real estate market's decline.