This file photo shows a bird’s eye view of a residential area in Seoul. (Yonhap)
SEOUL, June 26 (Korea Bizwire) — Construction orders in South Korea are likely to slump nearly 13 percent on-year in 2023 due to less government spending on infrastructure and a sluggish housing market, a think tank said Monday.
Local builders’ orders are predicted to decline 12.9 percent from a year earlier to 200.1 trillion won (US$154 billion) this year, according to the Construction & Economy Research Institute of Korea (CERIK).
In the second half of the year, construction orders are projected to fall 6.6 percent on-year, following a 19.1 percent tumble in the first half.
Construction investments are forecast to inch up 0.7 percent on-year to 259.6 trillion won for 2023.
“Building investments are predicted to decline gradually in the second half due to increased completion of construction projects,” said Park Cheol-han, a researcher at the institute.
“Overall civil engineering investments are likely to remain in the doldrums due to decreased government spending.”
Park warned that slumping construction orders, a harbinger of shrinkage in future construction investments, could touch off a serious crisis in regional economies.
The government should lose no time in coming up with a series of measures to support the construction industry, including more infrastructure spending, and to minimize the fallout from soured project financing loans, he added.
CERIK also predicted home prices in Asia’s fourth-largest economy will continue falling for the remainder of the year, though the pace of their decline is likely to slow down.
Housing prices are forecast to decrease 0.7 percent in the second half of the year from a year earlier, leading to a 4.8 percent on-year drop for all of 2023.
Home prices in Seoul and its surrounding region are predicted to hold steady overall in the second half, despite a rise in the country’s capital and some areas.
Following a 3.4 percent on-year fall in the first five months of the year, home prices in the rest of the country are likely to decline 1.7 percent for the remainder of the year, resulting in a 5 percent decrease for the whole of this year, the institute said.
South Korea’s home prices have been sluggish this year in the wake of high interest rates stemming from monetary tightening in major economies and a local economic slowdown.
(Yonhap)
