Opening Remarks at the People’s Economic Inspection Meeting
“Malignant unsold homes in rural areas have doubled in a year”
LH to directly purchase 3,000 unsold homes in rural areas, ‘[Edaily Reporter Choi Jung-hee] On the 19th, Minister of Land, Infrastructure, and Transport Park Sang-woo stated, “We will prepare improvement measures by March, including supplementing reasons for extending completion guarantees that have been burdensome to construction companies.”’,
Minister Park explained this in his opening remarks at the People’s Economic Inspection Meeting held at the government complex in Seoul, chaired by Vice Prime Minister and Minister of Strategy and Finance, Choi Sang-mok, acting on behalf of the president.
On this day, the government announced a ‘Regional Construction Economy Supplementary Plan’ that includes measures such as Korea Land and Housing Corporation (LH) directly purchasing unsold apartments in rural areas and applying preferential interest rates for didimdol loans to those who buy malignant unsold properties in rural areas.
Minister Park remarked, “Recently, construction industry sluggishness supporting regional economies and real estate market stagnation are continuing,” adding, “Construction investment last year decreased by 2.7% compared to the previous year, and due to delayed economic sentiment recovery and accumulated contracting sluggishness, it is projected to decline by about 1.3% this year as well.” He also added, “The number of unsold homes after completion in rural areas increased from 8,700 units at the end of 2023 to 17,000 units at the end of last year, nearly doubling in a year.”
Therefore, Minister Park announced, “To overcome these difficulties, the government will induce the activation of construction investment through the expansion of development projects, liquidity support, etc.”
Minister Park stated, “To alleviate the accumulated unsold housing, we will newly pursue a plan for LH to directly purchase about 3,000 unsold homes after completion in rural areas, and when purchasing unsold homes after completion in rural areas, we will introduce preferential interest rates on didimdol loans to reduce the burden on buyers. We will also support increased liquidity for housing transactions by providing incentives in household loan management for rural mortgage loans.”
Furthermore, “We will complete the follow-up measures of the construction cost realization plan announced last year as promptly as possible and expand its application to local government construction projects to extend the warmth of economic recovery to small and medium-sized construction companies in the region.”
Additionally, Minister Park stated, “Regarding the responsible completion that burdened construction companies, we will prepare improvement plans by March such as supplementing reasons for extension.” In project financing (PF) projects, they plan to differentiate debt acquisition ratios according to the period elapsed of the responsible completion deadline.
He further stated, “Several important bills such as the Reconstruction Promotion Law, the Development Profit Repayment Law, and the Construction Industry Law, which are important for construction industry recovery, are pending in the National Assembly, and we will actively consult with the National Assembly to ensure these key bills are promptly addressed.”
Minister Park added that they will “expand regional development projects by pushing forward with the underground railway projects for three sections, including from Busanjin Station to Busan Station, Daejeon Yard Station, and Ansan Elementary School Station to Jungang Station.” Additionally, for the Yongin Semiconductor National Industrial Complex, they aim to start construction in 2026, beginning with compensation and turnkey bidding for road projects in the first half of the year, and they plan to select GB national and regional strategic projects by February to drive regional investment.
It is also expected that the pace of early fiscal execution will increase. Minister Park emphasized, “Out of the government budget for social overhead capital (SOC) such as roads and railways, totaling 17.9 trillion won, we will execute 12.5 trillion won, the highest level ever, in the first half, and increase the actual execution rate so that funds circulate in the region, and we will execute 18.5 trillion won of the budgets of major public institutions like LH and the railroad corporation in the first half as well.”