Canada Wood Today | The Canada Wood Group

South Korea Economy and Housing Market Update for 2019

Tai Jeong

By Tai Jeong

Country Director, Canada Wood Korea

March 2, 2020

South Korea’s gross domestic product expanded only 2.01% year-on-year in 2019, mostly weighed down by the US-China trade dispute and Japan’s export restrictions. This was the slowest year-on-year growth since 2009, when the economy grew 0.8% amid the global financial crisis.


Exports fell 10.3% on-year in 2019 to $542.4 billion caused by a prolonged trade war between the U.S. and China, sharply slowing from a 3.5% on-year expansion in 2018 and Imports also dipped 0.6% in 2019, marking a turnaround from a 0.8% on-year gain from a year earlier.


Construction investment in 2019 contracted 3.3%, a second consecutive year of decline following a 4% drop in 2018 and facility investment also contracted 8.1% from a year earlier.


These are the first simultaneous drops in corporate investment in construction and facilities that South Korea has experienced in a decade. The last time was in 2008, when the nation was affected by the crisis that followed the U.S. subprime mortgage collapse.


Government spending climbed 6.5% on-year in 2019, up from 5.6% the year before, making up shortfalls in other sectors while private consumption, on the other hand, marked 1.9%, the lowest since 2014.


Consumer prices gained 0.4% from a year earlier in 2019, the slowest growth since the country began compiling such data in 1966.


The unemployment rate was unchanged at 3.8% in 2019, adding some 301,000 jobs. In particular, the employment rate for people aged between 15 and 64 rose to 60.8% in 2019, marking the highest figure since 1982.


The exchange rate for Canadian Dollar averaged at 892.21 in December 2019, up by 6.67% from 836.39 in December 2018 and slightly up by 1.13% from 882.26 in the previous month.


Housing prices in South Korea have been on the rise in recent years, spurring policymakers to roll out a series of measures, including tightened home-backed loan regulations and hefty taxation, to cool down overheated home sale prices.


Due to the diminished construction investment resultant from government cooling intervention since 2017, South Korea’s Housing Starts in number of buildings and total floor areas for 2019 decreased 19.1% and 14.3% respectively to 65,763 buildings and 33.359 million square meters and Housing Permits also decreased 24.5% and 19.3% respectively to 74,424 buildings and 46.241 million square meters from a year earlier.


Due to the current difficulty in getting building permits for wood structure caused by enhanced requirement on seismic design for small-scaled buildings and sound floor for Dagagu housing in coupled with the overall housing market decrease, the number of wood building starts and permits for 2019 decreased 15.4% to 10,011 buildings and 9.4% to 11,549 buildings respectively from a year earlier.


Wood Building 2013 2014 2015 2016 2017 2018 2019 (%)
Number of Starts 10,339 11,493 13,595 14,945 13,938 11,828 10,011 -15.4
Number of Permits 11,710 13,062 15,393 17,043 17,231 12,750 11,549 -9.4

Source: Ministry of Land, Infrastructure and Transport (as a percent compared to previous year same month and period)