Korea: avoiding price crash?

South Korean President Lee Myung-bak called on his Government on Monday to use financial measures, such as interest rates and lending controls, to avert a house price crash and a repeat of Japan's lost decade in the 1990s...

"Falling real estate prices are currently a general trend around the world, but we should prevent a rapid decline in prices," a statement from the presidential office quoted Lee as saying during talks with the land minister.

"We should not allow the repeat of Japan's lost decade," Lee said, referring to an economic slump that South Korea's neighbour suffered in the aftermath of a crash in real estate prices.

Lee said using administrative regulations in the real estate market would only have a limited effect, and the authorities should instead use available financial tools.

Source: Interactive Investor