Construction Industry Stifles At Real Estate Depression

Alarm signals are ringing in the construction industry as the real estate market dies down.

As the follow-up measures for the government’s strong policy to stabilize the home market continuously show their outlines, continuous non-sales of lots are appearing all over the country. Moreover, banks and other financial institutions are reducing the scale of loans related to constructions on account of obscure market prospects, thus choking the construction industry.

Lotting-out market cools: According to Kookmin Bank yesterday, at the eleventh Seoul simultaneous distribution, of the first priority applications, 493 houses out of a total 1301 houses were unsold. The competitive rate was the lowest since September 2001 (eighth simultaneous distribution).

The Kyu-ha District of Pa-ju City, Kyong-gi Province has been drawing interest as the largest housing land development district during the second half of this year, and non-distribution situations are continuously showing. On November 5, first ranking Jin-hong APT had 421 houses unsold out of a total of 493, and on November 3, third ranking Shin Dong-a APT had 121 houses unsold at the simultaneous distribution.

Non-distribution is appearing in the local districts and “minus premium” housing complexes are cropping up.

Recently, 94 houses were unsold out of a total of 580 at an apartment lot sale in Daejong-dong, Taejon.

At an apartment complex in Taegu, which had drawn much popularity during its lot sale in September with an average competition rate of 54 to 1 at the time, the prices were lowered by 10-30 million won from its original sale price and let out for an urgent sale, but purchases had died down and lots were piling up.

In Busan, urgent sales lowered by 5-10 million won from its original sale price are showing up but no transactions are being done.

Jae-Seong Hwang Cheol-Yong Lee jsonhng@donga.com lcy@donga.com