SEOUL, Construction orders in South Korea are likely to continue to drop in 2024 amid high interest rates and uncertainties both at home and abroad, a report showed Wednesday.
Local builders' orders are forecast to fall 1.5 percent from a year earlier to 187.3 trillion won (US$138 billion) next year, according to the report by the Construction and Economy Research Institute of Korea.
For this year, construction orders are projected to reach 190.1 trillion won, down 17.3 percent from an all-time high of 229.7 trillion won a year earlier.
Construction investments are predicted to decrease 0.3 percent on-year to 260.7 trillion won for the coming year.
"Construction orders are unlikely to perk up next year due to high interest rates and growing domestic and overseas uncertainties," said Park Cheol-han, a researcher at the institute.
A construction site in Seoul
Noting that it is uncertain when the Bank of Korea will cut key interest rates, he said construction companies are expected to continue to face difficulties raising funds amid escalating worries over the souring of project financing loans.
On Oct. 19, the central bank left the benchmark seven-day repo rate unchanged at 3.5 percent, marking the sixth straight freeze since February.
Park called on the government to lose no time in coming up with a series of measures to prop up the construction industry, including steps to stabilize the funding market for builders and more infrastructure spending.
According to the report, home prices in Asia's fourth-largest economy are predicted to continue their downturn in 2024, dropping 2 percent from this year.
In contrast, "jeonse" rates are likely to expand 2 percent on-year in 2024 amid a decline in demand for apartment purchases, the report said. Jeonse is a home rental arrangement unique to South Korea, in which tenants pay a large sum of money as a deposit instead of paying monthly fees.
South Korea's home prices have remained in the doldrums this year in the wake of high interest rates stemming from monetary tightening in major economies and a local economic slowdown.
Source: Yonhap News Agency