Canada Wood Today | The Canada Wood Group

Korean Economy, Housing & Lumber Shipments

Tai Jeong

By Tai Jeong

Country Director, Canada Wood Korea

May 29, 2012

Economy Update

South Korea’s economic recovery slowed noticeably in April as Europe’s debt crisis and other external sources of uncertainties persisted.Exports fell 4.7% from a year earlier to $46.3 billion and imports dropped 0.2% to $44.1 billion in April, resulting in a $2.2 billion trade surplus.Private consumption dampened somewhat, but indicators on consumption sentiment improved as the consumer sentiment index for April rose three points from previous month’s 101 to 104.The jobless rate decelerated and stood at 3.5% in April, down from 3.7% a year earlier, thanks mainly to more positions created in the service sector. The dollar closed at 1,123.77 won on May 23, 2012, up 1.3% from 1,009.24 the same date in 2011 and up 0.07% from 1,122.97 one month earlier.

Housing Construction

Korea’s housing starts in the first three months of 2012 increased 19.0% to 19,659 buildings from a year earlier 16,523 buildings owing to the continuous government extended financial support for local builders. The nation’s real estate market, however, particularly in Seoul and the surrounding areas, has suffered a long slump since 2007 despite government stimulus, dealing a blow to some local builders and development-related investment.  Aiming to boost the sagging real estate market, the government recently announced a package of measures that would lift restrictions on housing transaction in three up-market Seoul districts.

The new measures include”

  • easing the debt-to-income ratio from the current 40% to 50% which allows homebuyers to borrow more money from banks,
  • lifting 10% capital gains taxes imposed on multiple homeowners, offering financial benefits for people who purchase their first house,
  • easing restrictions that ban people from trading their exclusive purchase rights for apartments under construction,
  • reducing mortgage rates for people who own their first home,
  • providing more rental houses for low-income families and building homes for single-member households.

 Korean Wood Building Permits and Starts Summary:

The number of wood building permits and wood building starts for the three months in 2012 increased 10.6% to 2,681 and 27.0% to 2,336 respectively compared with the same period in 2011.

Wood Building

2008

2009

2010

2011

Jan.-Mar.

Jan.-Mar.

(%)

2011 YTD

2012 YTD

Number of Permits

10,184

11,022

10,922

11,382

2,424

2,681

10.6

Number of Starts

8,191

9,503

9,558

10,159

1,839

2,336

27.0

Source: Ministry of Land, Transportation and Maritime Affairs (as a percent compared to previous year same month and period)