Lee stressed that some construction firms should pay a price for their reckless building of apartments nationwide without proper consideration of demands.
"The stability in housing prices should be maintained," Lee said in a weekly economic policy meeting, according to his spokeswoman Kim Eun-hye. This week's session was focused on housing price policy.
"The era of purchasing houses for the purpose of property speculation has come to an end," Lee said, adding the government will shift focus to reducing inconveniences in housing transactions for those with residential purposes.
A growing number of construction firms here, largely small- and mid-sized firms specializing in apartment construction, face bankruptcy as potential homeowners delay purchasing apartments in anticipation of lower prices.
The government has been aggressively lifting green-belt restrictions in and around Seoul to lower apartment building costs as well as maintaining financial regulations on mortgage loans. The market also expects South Korea to raise key interest rates in the near future, a move to increase financial pressure on debtors.
While analysts are divided over whether South Korea's housing market bubble will burst anytime soon, they agree the decline in housing prices is likely to continue for the time being. Amid the trend, many of the new apartments built by civilian firms across the country remain unsold.
The president, once a construction firm CEO, said construction firms should take responsibility at least morally.
"I will look closely at current troubles in some construction companies but (they) should be held responsible morally for giving burden to many people by recklessly plunging into the housing market to cash in on the boom of the construction business," Lee was quoted as saying.
With regard to the country's regulations on mortgage loans through a cap on the loan-to-value (LTV) and the debt-to-income (DTI) ratios, the spokeswoman said participants at the meeting reached a consensus on the need to keep the system.
"The DTI has served as a tool in protecting the soundness of household debts and its effectiveness has been proven in the global financial crisis that stemmed from the U.S.," Kim said. "Opinions were dominant that it is premature to change the policy."
Economic policymakers also said the government has no immediate plan to relax the regulations.
"We are now paying close attention to property market conditions but we have no plan to raise the LTV and the DTI ratios at this point," Vice Finance Minister Yim Jong-ryong told Yonhap News Agency.
The LTV ratio measures a homeowner's outstanding debt on a property to the market value of that property, while the DTI ratio refers to the percentage of monthly gross income that goes toward paying debts.//Yonhap
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