Rainfall Relief Amid Drought... Industry Welcomes but Feels Regret Over Regional Construction Market Support Measures

"Regional Construction Firms Get a Lifeline Amid Collapse Risk"
"Regret Over Omission of DSR Regulation Easing"
Call for Prompt Passage of the Reconstruction Promotion Act in the National Assembly

The construction and housing industries generally welcomed the government's measures to support the regional construction market but also expressed some regrets.

The Korea Construction Association (KCA) stated on the 19th that it "welcomes the timely measures in response to the prolonged economic downturn and the crisis in the regional construction industry" following the government's announcement.

The association praised the expansion of regional development projects and the early execution of budgets included in the measures, calling them "a much-needed relief for construction companies struggling with order shortages."

It also said that the Korea Land and Housing Corporation (LH)'s direct purchase of unsold apartments in local areas and the Ministry of Land, Infrastructure and Transport's plan to buy unsold houses through corporate restructuring (CR) REITs "will provide immediate help to regional construction companies facing the risk of collapse."

A model house of an apartment in Pyeongtaek-si, Gyeonggi Province on the 19th. Photo by Yonhap News

However, the association expressed regret that the temporary easing of the Debt Service Ratio (DSR) regulation, which is essential to revive the local real estate market, was not included in the measures.

It also pointed out the issue of real estate project financing (PF), which exacerbates funding difficulties. The association emphasized, "PF insolvency has repeatedly occurred during economic downturns," and urged, "The Financial Services Commission and the Ministry of Land, Infrastructure and Transport task force should promptly finalize the improvement plan for responsible construction to create a fair PF market."

Regarding measures to revitalize redevelopment projects, the association viewed the passage of related legislation as crucial. It said, "Following the August 8 measures last year, additional support such as procedural simplification and floor area ratio increases reflect market demands," and requested, "Since the 'Reconstruction Promotion Act' containing these measures is currently pending in the National Assembly, we ask for expedited legislation."

The association also called for follow-up measures addressing construction cost burdens and liquidity crises. It stated, "The construction cost rationalization measures announced last December should be swiftly implemented, and financial support through market stabilization programs and policy financing must continue."

On the same day, the Korea Housing Association, together with the Korea Housing Builders Association, issued a joint press release expressing regret that "key incentives such as tax and financial support to stimulate overall housing demand were not included," and said, "These should be supplemented as soon as possible." However, both associations evaluated that the measures would be effective in increasing public rental housing in regions to stabilize housing for the homeless and reduce unsold inventory.

The Korea REITs Association responded to the government's plan for CR REITs to purchase about 5,000 unsold units in local areas by stating, "The REITs industry will actively work to launch REIT products related to unsold housing in line with the policy intent."

Han Seung-gu, chairman of the Korea Construction Association, said, "We hope that these measures will revive the regional construction market facing difficulties and quickly recover the sluggish domestic demand," adding, "The construction industry will also do its best to overcome the crisis."

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