New Housing Starts Drop to 8-Year Low
By Oh Young-jin
Staff Reporter
The amount of land for which construction permits were granted fell to a 20-year low in January, while new housing construction also marked the lowest since data was first collected in 2000.
These statistics, if combined with a growing number of unsold apartments, confirm the dire straits facing builders, indicating a protracted slump for the key industry that has traditionally been a big employer.
According to the Ministry of Land, Transport and Maritime Affairs, Monday, the area of land for which construction permits were granted fell 48 percent year-on-year to 4.49 million sq. meters. By category, housing start permits went down 63 percent to 0.9 million sq. meters, commercial areas dropped 53 percent to 1.07 million sq. meters and industrial purposes dipped 38 percent to 0.97 million sq. meters.
The actual starts on permits were even more dismal.
In January, construction started on only 3.64 million sq. meters, down 40 percent from a year ago. For residential areas, the size tumbled 50 percent to 0.77 million sq. meters, the lowest since 2000.
The construction industry has been faltering due to a lack of investment and is aggravated by the growing blocks of unsold apartments. The latest data show that there are at least 160,000 unsold apartments across the country.
Jitters are besetting builders as creditors have been driving out zombie companies.
``Financing is difficult because banks are reluctant to lend,'' a construction firm executive said, adding that unsold housing units went up by 53,000 last year alone. He also pointed out that the government's promise to ease regulations on the remodeling and sale of homes in the so-called Bubble Seven district in Seoul has not been translated into action, further dragging down any hope of a recovery.
In addition, a package of stimulus measures, including the abolition of the ceiling on the prices of new homes, is stalled.
``We are trying to expand the construction of public housing to reinvigorate the industry,'' a ministry official said.
Industry watchers say that the current lack of new starts is not just a problem for now but is likely to trigger housing shortages two or three years down the road.
``It is important to help `real' home buyers to purchase homes,'' a real estate agent said, expressing his understanding for a need to stifle speculative buyers.