South Korea announced on Thursday that it will increase financial support for real estate development projects and relax certain restrictions for young homebuyers, aiming to stabilize the overheated housing market.

Earlier this month, the administration led by President Lee Jae-myung proposed raising taxes on wealthy homeowners. Lee's approval ratings have recently declined due to rising home prices and stock market volatility.

The Financial Services Commission (FSC) stated in a release that the measures unveiled on Thursday are designed to "stabilize the housing market by expanding housing supply and offering a comprehensive financial support package for young people and those with genuine needs." The FSC said it will raise the policy support scale for real estate development project financing from the originally planned 26.3 trillion won to over 47.8 trillion won (approximately $33.72 billion), in order to boost housing supply.

The FSC also announced new policy loans for young people and newlyweds purchasing their own homes, while maintaining or tightening restrictions on speculative housing demand.

South Korea is one of the countries with the highest levels of household debt globally. To curb household debt, the country has established a complex borrowing regulatory system. The FSC indicated that it will keep household debt growth at around 3% this year, higher than the previously set target of 1.5%.

A Gallup Korea survey released on July 24 showed that Lee's approval rating fell to a one-month low of 51%, with housing market policy identified as a major factor dragging down his support. This follows a report that South Korea's home prices in June posted their largest gain since November 2021.