There is a forecast that the construction market in Korea may recover somewhat in the second half of the year.
The Hyundai Research Institute noted in a report released on the 29th, titled "The timing of construction market improvement may be accelerated," that "the construction market in the second half is expected to enter a recovery phase, albeit limited, thanks to the expansion of public sector supply and improvements in financial conditions."
The institute pointed to factors for construction market recovery in the second half, such as the expectation of increased government expenditure on SOC (social overhead capital) if this year’s SOC budget is increased to 27.3 trillion won through the second supplementary budget, and the anticipated increase in public housing and rental housing supply if the government fulfills its election pledges.
The institute projected that if approximately 54% of the distressed real estate project financing (PF) loans are resolved by this month and an additional support of about 800 billion won is provided through the second supplementary budget, the financing conditions for the construction industry could improve somewhat. It is also positive that housing sales conditions could improve if market interest rates decline due to the trend of lowering the benchmark interest rate.
However, the institute forecasted that factors such as ▲ sluggish recovery of local housing prices ▲ delays in resolving unsold dwellings ▲ strengthened household loan regulations ▲ downward rigidity of construction raw material prices such as cement and reinforcing bars could act as hindrances to the recovery of the construction market.