The pace of growth in South Korea's construction investments is set to slow down next year due to stricter lending rules aimed at stabilizing the overheated real estate market, the central bank and local think tanks said Saturday.
The Bank of Korea estimated the rate of growth in the country's construction investments to fall to 6.9 percent this year from 10.7 percent last year. It is projected to plunge to 0.2 percent next year.
Private research centers have offered a more gloomy outlook next year.
The Hyundai Research Institute and the LG Economic Research Institute made a 0.1 percent growth and a 0.4 percent negative growth forecast, respectively. The Korea Economic Research Institute came up with a 0.8 percent negative growth outlook.
On Tuesday, the government announced a comprehensive plan to tackle the country's soaring household debt, which reached 1,340 trillion won (US$1.19 trillion) at the end of December. From January, it will introduce a new debt-to-income (DTI) ratio that can more accurately reflect the borrower's income and mortgage payment burden, mainly in the Seoul metropolitan area.
|This undated file photo shows apartment complexes in Seoul, near the Han River. (Yonhap)|
The stricter lending regulations will also consider the principle of a borrower's existing homes in Seoul and other government-designated areas.
The government said it aims to maintain the country's household debt level at between 1,450 trillion and 1,460 trillion won by the end of this year.
Major construction projects for the 2018 PyeongChang Winter Olympics, which runs from Feb. 9-25, are in the final stages, and the government's budget for public infrastructure projects next year also fell to 17.7 trillion won from this year's 22.2 trillion won, according to the central bank.
Hwi Won firstname.lastname@example.org
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