Government Saved PF — So Why Are Apartments Still Expensive?

The Government Stepped In to Support Real Estate PF

On August 13, 2026, the South Korean government announced a real estate financing policy package. The centerpiece was strengthening support for PF (Project Financing) — the loans construction companies use to fund building projects. If PF dries up, construction stops. And if construction stops, housing supply shrinks down the road, which can push prices up. The government's goal was to prevent a supply crisis.

First — What Is PF?

Building an apartment complex requires hundreds of millions of dollars. No developer has that cash on hand. So they borrow against the future presale revenue of the apartments they plan to sell. That's PF. If interest rates rise or presales stall, repaying the PF loan becomes difficult — and in the worst case, construction halts. That risk has been spreading across Korea, which is why the government moved to act.

So Why Aren't Apartment Prices Falling?

Government support lifted the mood among developers and construction firms. There's now a sense of 'we can breathe again.' But actual homebuyers are in a very different situation. High interest rates make mortgage payments crushing. For example, buying a 500 million won apartment with 70% financing (350 million won) at 7% interest means paying roughly 2.04 million won per month — just in interest. That burden makes most people think twice before buying.

Mortgage Lending Rules Have Also Tightened

At the same time as supporting PF for developers, the government tightened rules on individual home loans. The DSR (Debt Service Ratio) — the share of your annual income that goes toward debt repayment — caps how much you can borrow if your income isn't high enough. So while the supply side (developers) is getting relief, the demand side (real buyers) is still boxed in.

Why Are Presale Prices Still High?

From the developer's perspective, construction costs have surged. Labor and materials have risen sharply over the past few years, driving up the base cost of building. Add PF interest costs on top of that, and developers have no choice but to pass those expenses into the presale price. The structure is: even with government support, prices can't come down.

Developer Sentiment ≠ Buyer Conditions

This is the key point. Government support has revived the 'things will get better' sentiment among developers. But the actual conditions facing homebuyers — interest rates, loan limits, and prices — haven't changed. That's why people ask: 'The government helped, so why are apartments still expensive?' Because those are two completely separate problems.

What Happens Next?

If interest rates start to fall, the monthly burden on buyers will ease and the presale market could recover. But for now, the Fed is still in a hiking cycle and Korea remains in a high-rate environment. Major price swings in the short term are unlikely — and the gap between sought-after areas and less popular ones is likely to keep widening.