The recovery in the construction market has faltered again after four months. It is analyzed that the sluggish new orders in the housing and civil engineering sectors had a decisive impact.
View of apartment complexes south of the Han River as seen from Namsan, Seoul. / Photo by Yonhap News
The Korea Construction Industry Research Institute announced on the 3rd that the Construction Business Survey Index (CBSI) for March recorded 72.2, down 6.2 points (p) from the previous month.
If the CBSI falls below the baseline (100), it means that more companies view the current construction market pessimistically than optimistically, and if it is above 100, the opposite is true.
The CBSI recorded its lowest figure in 12 years and 3 months at 52.5 in November last year. Since then, it rose by 1.8p, 9.4p, and 14.7p respectively until February this year, showing a recovery trend. This was thanks to the continued effects of the government's real estate regulation easing. However, as the new order situation did not improve, it turned downward after four months.
In fact, the new construction orders BSI in March fell 11.8p from the previous month to 70.8, the lowest in the past four months. Housing dropped 10.9p to 59.1, and civil engineering fell 6.3p to 76.6. Park Cheol-han, a research fellow at the Korea Construction Industry Research Institute, explained, "Although financing and the construction progress index slightly improved, the sluggish new orders hindered the overall index recovery."
The CBSI forecast for April is expected to rise 17.9p to 90.1. Researcher Park said, "Next month, the index is expected to recover by more than 15p as the new order situation partially improves. However, since interest rates remain high, it will be difficult for the real estate market to improve significantly."
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