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President Lee Jae-myung speaks during a Cabinet meeting at the presidential office in Yongsan, Seoul, on October 14. / Source: Yonhap News

President Lee Jae-myung on Tuesday warned that South Korea’s real estate market is severely overvalued and could face a correction similar to Japan’s asset bubble collapse, urging a shift toward more productive and diversified investments.

“Thinking that you can grow your wealth through real estate speculation is a thing of the past,” Lee said during a Cabinet meeting at the presidential office in Yongsan, Seoul. “Property prices are overvalued, and at some point, there’s a high possibility we’ll end up like Japan. It’s like a game of hot potato.”

His remarks come as housing prices in some districts have surged abnormally, prompting speculation that the government will unveil additional market stabilization measures later this week.

Lee emphasized that South Korea’s property values are far out of line with its income levels. “Compared internationally, our real estate prices relative to national income are probably among the highest. It will inevitably burst one day,” he said.

The president urged his Cabinet to help redirect investment toward more sustainable areas, noting that citizens now have diverse alternatives beyond property. “There was a time when real estate was the only investment option, but now the global market offers many alternatives. We must also normalize our capital markets,” he said, adding, “The Land Ministry and Financial Services Commission are most critical in this effort.”

Addressing Financial Services Commission Chairman Lee Ok-won and Land Minister Kim Yun-duk, Lee said, “We need to shift our focus to productive finance and foster a long-term, rational investment mindset across society. Are you preparing well for that transition?”

Meanwhile, Kim Yong-beom, senior presidential secretary for policy, said during a “Digital Talk Live” session on economic revitalization that the government will announce new housing supply and real estate stabilization measures this week. “Plans include establishing a new supervisory body to oversee the housing market,” Kim said.