South Korean President Lee Jae Myung has attributed the country’s ongoing housing instability to excessive speculation in the real estate market, driven by limited investment alternatives and surplus liquidity.

Speaking at a Cabinet meeting on Tuesday, President Lee emphasized that the overreliance on property as an investment vehicle has distorted housing supply and affordability. “As investment options have been largely limited to housing or real estate, homes have repeatedly become tools for investment or speculation, leading to housing instability,” Lee said.

He urged efforts to maintain momentum in the country’s stock and financial markets to help diversify investment opportunities for the general public. “Fortunately, with the recent normalisation of the stock and financial markets, alternative investment options are gradually gaining ground. I believe it’s important that we maintain this positive trend,” he added, according to Yonhap news agency.

The remarks came shortly after South Korea’s Financial Services Commission introduced strict lending curbs to control rising household debt. Starting this week, all domestic banks must significantly reduce household loans, and new mortgage-backed loans for home purchases in the capital region will be capped at 600 million won (about US$442,000).

This is the first major real estate policy under the Lee administration, introduced amid a surge in home prices and growing concerns about debt-fueled speculation.

Presidential spokesperson Kang Yu-jung said the administration is closely monitoring how the market responds to the new rules. “Reviews are also underway on the supply side to address demand for new housing,” she said.

The administration’s focus now appears to be on long-term financial stability through curbing speculation and encouraging more balanced investment behavior.