Korean Economy, Housing & Lumber Shipments
The South Korean economy grew at the fastest pace in more than two years in the second quarter of 2013 on increased fiscal spending supporting the view that the local economy is on the recovery track. South Korea’s GDP grew 1.1% in the second quarter from three months earlier, quickening from a 0.8% on-quarter advance in the first quarter, marking the fastest quarterly growth since the 1.3% growth in the first quarter of 2011. This GDP growth in the second quarter was mainly contributed by the expanded government spending which grew 2.4% after growing 1.2% in the first quarter.
South Korea logged exports of $276.6 billion during the first half of 2013, up 0.6% from a year earlier and imports shrank 2.8% on-year to $256.6 billion during the same period registering a cumulative $20 billion trade surplus. Private spending rose 0.6% on-quarter in the second quarter after contracting 0.4% in the first quarter and will likely advance 2.1% in 2013 and grow 3.5% next year. Facility investment declined 0.7% in the second quarter after gaining 2.6% in the first quarter and is expected to gain 1.8% this year and pick up to 7% in 2014. Construction investment advanced 3.3%, compared with a 4.1% on-quarter expansion in the previous quarter and will likely grow 4.5% this year before advancing 2% next year. South Korea’s jobless rate stood at 3.1% in June, inched up from the previous month’s 3%. South Korea’s consumer price growth stayed in the 1% range for the eighth straight month in June, indicating that inflation remains in a quite stable mode. The dollar closed at 1,060.35 won on July 26, 2013, decreased 4.24 % from 1,107.35 the same date in 2012 and down 1.74 % from 1,079.08 one month earlier.
Korean Housing Starts Summary and Market Condition:
Korea’s housing starts in the first five months of 2013 decreased 11.3% to 35,192 buildings from a year earlier 39,654 buildings. The number of wood building permits and wood building starts for the first five months in 2013 also decreased 8.9% to 4,769 and 7.2% to 4,322 respectively compared with the same period in 2012.
The South Korean government decided to trim property acquisition tax rate to jumpstart the real estate market. Tax reduction rate and other details will be concluded by the end of August and a finalized bill will be presented for approval to the National Assembly in September. Currently, the government imposes a 2% acquisition tax on a house valued at 900 million won (CAD $818,000) or less. The rate is 4% for a house whose value exceeds the mark. In the past, the government had lowered the acquisition tax rates as a major tool to stimulate stagnant home transactions, but these reductions were only temporary. They are now demanding the government make the tax benefit permanent.