SEOUL -(Dow Jones)- The South Korean government said Wednesday that it will increase taxes on houses in popular areas of Seoul and nearby provinces and build more satellite cities, to stabilize surging house prices. The government will also encourage financial companies to cut mortgage lending to house buyers, it said in a statement.
Due to the low interest rate environment and unstable stock markets, South Korea's house prices have risen sharply since the second half of last year. Apartment complexes in Seoul and its satellite cities - especially in the southern part of Seoul where good schools are located - led the price surge, the government said.
With those popular areas already crowded with apartments, the supply of new houses also declined, it said.