Sangwoo Park "Discussing Measures to Realize Construction Costs... Will Remove Construction and Housing Regulations"

by Roh Kyungjo

Published 08 Mar.2024 14:42(KST)

Park Sang-woo, Minister of Land, Infrastructure and Transport, stated that he is deeply considering the issue of rising construction costs, which is one of the difficulties faced by the construction industry.

Minister of Land, Infrastructure and Transport Park Sang-woo is speaking at the 'Construction Market Recovery and PF Soft Landing Support Meeting' held at the Construction Hall in Gangnam-gu, Seoul on the morning of the 8th. / Photo by Yonhap News

On the 8th, at the 'Construction Economy Recovery and PF Soft Landing Support Meeting' held at the Construction Hall in Gangnam-gu, Seoul, Minister Park said, "We are currently discussing measures to reflect the actual construction costs within the ministry." The meeting was attended by representatives from the Korea Construction Association, Korea Specialty Construction Association, Korea Housing Association, Real Estate Development Association, member companies, and the Housing & Urban Guarantee Corporation (HUG).

In his opening remarks, Minister Park noted that the construction industry is experiencing a 'triple hardship.' He diagnosed, "As the real estate market is sluggish, issues such as an increase in unsold housing units are arising in the housing sector," and added, "In particular, construction unit prices are rising in the construction sector." He further stated, "To overcome this situation, we are working to expedite fiscal spending and to quickly remove regulations on construction sites and the housing market."

Attendees raised concerns that although construction costs have increased significantly due to inflation, these increases are not properly reflected in construction payments. They explained that due to customary practices, construction costs are lowered from the bidding process, making it difficult to receive appropriate construction fees. They also requested the elimination of unfair financial practices related to high interest rates. This was a call to improve various fees that financial companies demanded when the construction market was strong in the past. Regarding real estate PF, they emphasized the need to strengthen the roles of the Housing & Urban Guarantee Corporation (HUG) and the Construction Guarantee Association to enhance responsiveness to the financial sector.

In response, the Ministry of Land, Infrastructure and Transport plans to closely cooperate with financial authorities to ensure that the selection of PF project viability minimally impacts the real economy, including the construction and real estate markets. Minister Park said, "Taeyoung Construction has already entered workout, and the government is not unaware of these issues," adding, "We will monitor the market situation and determine the extent of the government's role."