Korean housing boom has cooled
Despite improved international trading, the domestic economy is being dampened as strong growth in construction eases. The forecast is for the economy to expand slower in 2018 than in 2017.
Planned increases in public employment and social spending, aimed at raising the minimum wage, are expected to boost household consumption and help to offset a drop in residential investment.
As a whole, construction activity in 2017 was up on 2016. During the final quarter activity started to decrease. Housing starts have been dropping since 2016 with government policy aimed at stabilising the real estate market. The residential sector is also feeling the effects of high household debt and a weak employment rate.
Although in general construction is expected to slow, investment by the high-tech and manufacturing sector should hold steady given the upswing in exports. Samsung Electronics and SK Hynix will be key players in 2018.
|Market:||Staying the same|
|Cost escalation 2017–18:||5.0%|
|Cost escalation 2018–19:||3.0%|
|Location factor (USD):||53.2|
Public infrastructure, energy, commercial and industrial projects should support construction activity. In June 2017, the government announced investment of USD36.6bn on the energy infrastructure intended to increase the share of natural gas in electricity production. The government also plans to invest USD79.4bn to increase the railway network by 39 percent, from 3,550km in 2016 to 4,934km by 2025.
This content is part of the International construction market survey 2018