Construction

Construction Material Prices in South Korea Surge by 36% Over Three Years, Adding to the Industry's Challenges

Amidst an unprecedented inflationary period since 2021, South Korea's construction market faces a double burden as the cost of construction materials, including steel and cement, has risen by 35.6%.

Photo by Etienne Girardet / Unsplash

The Korea Construction Industry Institute (KCI) has reported a significant increase in construction material prices, marking a 35.6% rise since 2021, exacerbating the financial strain on construction companies already grappling with project financing (PF) crises. This increase, detailed in the KCI's "Construction Trends Briefing Issue 944," reflects the broader inflationary pressures affecting the global economy and the specific challenges within South Korea's construction sector.

From the end of 2020 to the end of last year, the price of construction materials, often referred to as intermediate construction goods, surged by 35.6%, with the construction cost index rising by 25.8%. This escalation in costs has expanded the financial burden on construction projects, with materials accounting for 37.7% of construction costs. The report highlights that among 266 materials, construction metals, ready-mixed concrete, and steel bars saw the highest input cost increases.

The past three years have not only seen a rise in material prices but also supply issues, including shortages of steel reinforcement bars and cement, further complicating the situation for construction companies. The KCI's report suggests that to rebound from the current downturn in the construction market, the government must implement policies to stabilize material supply and encourage construction investment.

Source: Newsian

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