Korea Economy, Housing Starts and Lumber Shipments
South Korea’s economy is recovering from the second-quarter slump triggered by the Middle East Respiratory Syndrome outbreak, but weak exports are weighing on its growth.
South Korea’s export, a key growth engine for the country, plunged 14.7% on-year in August to US$39.33 billion. Marking the 43rd straight month trade surplus, South Korea’s trade surplus still widened to US$4.35 billion as imports dropped at a faster rate of 18.3% on-year in August to US$34.98 billion.
As reported earlier, the MERS outbreak crippled private spending in June and the early part of July after the first case was confirmed on May 20. But from the later part of July, South Korean consumer sentiment shows signs of improvement as fears over the MERS outbreak ebbed.
Consumer sentiment in South Korea inched up in August, improving for a second straight month reaching overall consumer sentiment index to 102, gaining from 100 in the previous month.South Korea’s consumer price growth has remained weak mostly due to low energy prices with inflation remaining below 1% (0.7%) for the ninth consecutive month in August.South Korea’s jobless rate stood at 3.4% in August, down from 3.7% in one month earlier.
The exchange rate for Canadian Dollar averaged at 896.80 won in August, 2015, down 4.43 % from 938.36 in August, 2014 and slightly up by 0.62% from 891.31 in one month earlier.
Korean Housing Starts Summary and Market Condition:
South Korea’s housing starts in year-to-date July of 2015 remarkably increased 19.3% to 64,892 buildings from a year earlier 54,373 buildings owing to the continuous government measures to revamp the country’s property market and the increased demand from end-users on new housings caused mainly by the continued rise in jeonse (lump sum deposit rental) prices.
Housing permits in the same period also increased 18% to 70,563 buildings from a year earlier 59,788 buildings.
The number of wood building permits and wood building starts in year-to-date July of 2015 also increased 16.2% to 8,860 buildings and 18.6% to 7,820 buildings respectively compared with those in 2014.
The continued rise in jeonse prices is prodding South Koreans to opt to buy homes rather than rent, which in return led to a rise in housing prices and record high home transactions.
Apartment transaction prices in Seoul, for instance, have risen 3.25% in 2015, which is nearly three times faster than a 1.1% annual increase last year.
South Korea’s home transactions climbed to a new high for the month of August.
The number of home transactions came to 94,110 in August 2015, up 23.2% from the same month last year and home transactions in the first of eight months of 2015 spiked 30.1% on-year to 815,581, owing to a series of government measures aimed at revitalizing the property market, which included a 10-year reduction in the minimum age of large apartment buildings eligible for reconstruction that has apparently prompted investment in older apartments.
Owing to increased WFC housing starts, BC softwood lumber export volume to South Korea for the first seven months in 2015 dramatically increased 14.5% to 187,902 cubic meters as compared to 164,118 cubic meters for the same period in 2014. As a consequence of increased export volume, export value in year-to-date July also increased 15.6% to CAD$50.144 million as compared to CAD$43.379 million in the same period in 2014.