SEJONG (Reuters) – South Korea won't see a repeat of the sharp home price gains it did in the past as its population rapidly ages and economy slows, the country's land minister said, vowing to promote public rental accommodation to improve access to housing.

"The population is ageing and the economy is growing by just 2 per cent to 3 per cent each year. There is no way home prices will rise as they did in the past," Park Sang-woo, minister of land, infrastructure and transport, said in an interview with Reuters on Monday.

"In the past, the economy grew by 7pc to 10pc every year, and there were two or three kids in each family. There will never be a ‘déjà vu’ of that for this generation."

South Korean median home prices hit a peak in June 2021 after rising 45pc over five years, according to Korea Real Estate Board data. It has since fallen 19pc following an aggressive interest rate cycle by the central bank.

Still, South Koreans cite high housing costs as the biggest reason behind nose-diving births and marriages. The country's fertility rate, already the world's lowest, hit a fresh record low in 2023.

According to the ministry's annual survey, home prices in 2022 were 6.3 times higher than annual household income, easing slightly from 6.7 in 2021. In the capital Seoul, however, the price-to-income ratio was 15.2, up from 14.1 a year earlier.

The government is working to provide a more affordable housing.

This year, it has rolled out cheap mortgages for newly-weds who plan to have a baby. To restore work-life-balance in the wider Seoul area where 45pc of population live, the government plans a high-speed underground rail network to connect less expensive housing markets in outskirts of Seoul to jobs in the city's centre.

At the same time, the government will provide a greater range of long-term public rental homes through the corporate sector by easing regulations.

It will also help young people invest in assets other than real estate, he said.

With real estate demand still weak, Park said he shared the views of financial authorities that unprofitable property projects needed to be restructured.

Last December, Taeyoung Engineering & Construction, a mid-sized South Korean builder, rescheduled its debt, fanning concerns about debt repayment troubles in the sector.

"The structure of real estate project financing, which had worked just fine, is now being shaken by slowing demand and rising input costs," Park said. "We are making various efforts to stop that."