Construction Stocks: Policy Impact Grows Larger Than Supply and Demand... 'Increase Weight'

Three-Year Grace Period for Actual Residence Obligation Announced as Positive Development

The government announced that the actualization rate of publicly announced real estate prices will be frozen at the 2020 level. The photo shows a newly built apartment complex in Seoul on the 21st. Photo by Jinhyung Kang aymsdream@

Hyundai Motor Securities evaluated on the 21st that the stock prices of the construction sector are increasingly likely to be determined by real estate policies after the general election. Accordingly, the investment opinion was presented as 'Overweight.'

Shin Dong-hyun, a researcher at Hyundai Motor Securities, stated, "Unlike before, with the interest rate level structurally rising, the influence of government policies will expand more than market supply and demand," adding, "The stock prices of the construction sector are also more likely to be determined by the direction of real estate policies after the general election."

Researcher Shin analyzed, "The recently discussed three-year deferral plan for the mandatory residence requirement in the pre-sale price system areas is expected to prevent the appearance of urgent sales and maintain the normal cash flow of developers and contractors."

He further forecasted, "If the Land Act subcommittee on February 21, the plenary session on the 22nd, and the main session on the 29th pass the bill, the mandatory residence requirement will be temporarily lifted for 49,766 households, which will act as a positive factor for the construction sector."

Earlier, the effect of the special newborn loan implemented on January 29 has fallen short of expectations. Immediately after the loan was launched, the application amount recorded 2.4765 trillion KRW, accounting for 10% of the total support scale of about 27 trillion KRW, but loans for new sales and lease contracts were only 488.4 billion KRW (19.7%) and 160.8 billion KRW (6.5%), respectively. More than 70% was used for refinancing, failing to lead to an expansion of new demand.

Researcher Shin predicted, "A gradual turnaround in the housing division of construction companies is expected to begin in the second half of this year, and the overseas sector's business conditions will remain favorable this year as well, following last year." However, he added, "If we look only at the immediate housing market, a conservative approach to construction stocks is still recommended."

This content was produced with the assistance of AI translation services.