South Korea's housing market continued to improve in the first quarter of 2015 amid a surge in transactions and rising prices, a report showed Tuesday.
  

Home purchases surged 18.3 percent on-year to 270,053 in the January-March period, the highest number since the first quarter of 2006, according to the report by the state-run Korea Development Institute.
  

The average price of homes in the country also rose 2.3 percent from the year before, and 2.1 percent from the previous quarter, a sign that the market is continuing to improve.
  

"Overall, the local housing market continues to show good trends," the think tank said.
  

The KDI attributed the rise in sales and home prices to a combination of factors such as low interest rates, greater confidence in the real estate market, and the passage of bills late last year that reduced the cost of owning a home.
  

In regards to surging rent, the KDI said "jeonse" prices rose 3.6 percent on-year in the three-month period, although the gain fell from a 3.8 percent increase reported for the fourth quarter.
  

Jeonse is a local property lease system in which tenants pay a large deposit in place of monthly rent. It usually consists of two-year contracts.
  

The average amount of jeonse stood at a record high 71 percent of home prices in the first quarter, it said. Jeonse prices have consistently outpaced home price gains for some time.
  

"Low interest rates and less jeonse homes on the market, as home owners switch to monthly rent, are all contributing to the rise in rent for these homes," the KDI said.
  

The think tank said outstanding mortgage loans reached 465.8 trillion won ($435 billion) as of late February, up 3.8 trillion won from a month earlier. The increase in bank loans comes as authorities eased loan-to-value and debt-to-income ratios that made borrowing easier.
  

In the second quarter, the number of new homes reaching the market will rise, but a drop in the number of available homes in Seoul and nearby Gyeonggi Province may push up rent prices, the KDI predicted. (Yonhap)