In the toughest steps ever taken to cool housing prices in Seoul and neighboring areas, mortgage loans have been banned when buying a home worth over 1.5 billion won ($1.3 million) in “speculative and overheated speculative” areas since Tuesday.

The loan-to-value ratio for the purchase of a home valued from 900 million won to 1.5 billion won will be cut to 20 percent from the current 40 percent, according to the finance ministry.

The speculative areas include four districts in Gangnam and 11 other districts in northern Seoul. Seoul‘s 25 wards and four wards in Gyeonggi Province are designated as overheated speculative areas.

Critics called the toughened measures excessive. But the finance minister defended them on Thursday, stressing a “large majority” of apartments are not subject to the restrictions.

“In the speculative and overheated speculative areas, the top 30 percent of homes exceed the 900-million-won mark, while the top 10 percent exceed 1.5 billion won,” he said in an interview with the local news cable channel YTN.

Hong also pointed out that the tendency to view a home as an asset to profit from rather than as a place to live in has affected the real estate market.

Commenting on the recommendation for senior public officials to own only one home, the minister said it was a manifestation of the “resolve to lead by example.”

“Though we cannot force an individual (to own only one home), we hope that senior officials respond in an appropriate manner,” he said.

Housing prices have been on the rise in recent years, spurring policymakers to roll out a series of measures, including tightened home-backed loan regulations and hefty taxation, to cool down home prices.

But a supply shortage in Seoul and adjacent areas and low borrowing costs have continued to drive up demand for new apartments, while prodding builders to scramble to demolish aged apartments on hopes for hefty gains after rebuilding. (Yonhap)