South Korea could back down from its "market-unfriendly" South Korean property policies once the local property market returns to stability, a senior government official said Tuesday.

Critics have accused the government of going against market rules with some of its recent property policies, especially those that require private builders to unveil part of their apartment construction costs and cap sale prices.

"It is true that the government's flip-flop property policy has led to fluctuating house prices," Cho Won-dong, a director-general at the Ministry of Finance and Economy, told KBS Radio. "If the housing market regains stability, the government can reverse the property policies deemed unfriendly to the market."
Cho's comment came after he returned from a meeting with officials at the Organization for Economic Cooperation and Development (OECD) to discuss the OECD's draft economic survey on the South Korean economy, which criticized the government for adopting "market-unfriendly" property policies.

At the Wednesday meeting in Paris, the South Korean delegation explained to the OECD that the Korean economy is in a special situation and needs to implement such measures, according to the ministry.

The OECD has reached the conclusion that the Korean government's property policy is a "second-best" option, a step back from its criticism, it said.

"Last week, we explained to the OECD officials that a market-friendly policy does not always promise the best results," Cho said. "Typically, the housing supply should rise if the government adopts a market-friendly policy, but the Korean economy failed to do so in the past."
Since 2005, the government has made a series of attempts to rein in the property market and is increasing the supply in the public sector in an attempt to ease jitters, Cho said.

South Korea's government has unveiled a series of major property policies since 2005. The latest one came at the end of January and is aimed at boosting the supply of rental housing over the next 10 years and set up a property fund to finance their construction.

According to data by Kookmin Bank, the apartment sale prices in Seoul rose 0.3 percent in February from a month earlier, a much slower growth rate than the 1.8 percent advance in January.