Provincial property aid unveiled

Provincial property aid unveiledThe government announced yesterday that itpandora beads wholesalewill spend 5 trillionFingerprint Time Attendancewon ($4.5 billion) to buy unsold homes mainly in provincial areas to prevent a financial crisis for the construction industry.

The debt problems in the construction sector threaten to have wider implications. Kim Choong-soo, the new Bank of Korea governor, suggested this week that he was reluctant to raise interest rates because it could disrupt the housing market when there is already a surplus of unsold apartments.

The market intervention by the government is meant to reduce the number of unsold apartments by 40,000. As of February, there were 116,000 new homes on the market, including 89,000 in provincial areas. There are around 75,000 unsold homes under normal market conditions

“Builders are suffering from a liquidity shortage amid an increasing number of unsold apartments. We’re worried that the potential bankruptcy of builders will hurt potential buyers of their apartments and the financial sectors,” said a joint statement issued by four government bodies, including the Ministry of Land, Transport and Maritime Affairs, after aFingerprint Time Attendancemeeting with the president.

The plans come before local elections on June 2. “The measures are expected to ease a slump in the provincial home markets and strengthen the base for stable home supply by providing the construction sector with emergency liquidity,” the joint statement said.

The default rate among local building contractors rose to a decade high last year, according to the Korea Financial Investment Association. Among 920 building contractors, 3.8 percent defaulted last year, up from 2.5 percent in 2008.

Officials fear that debt problems in the construction industry pose a risk to banks since the 100 largest building contractors owe a total of 30.3 trillion won in project financing loans and payment guarantees.

The BOK governor referred to this problem this week in discussing the outlook for an interest rate hike. A change in monetary policy that “brings huge changes to the property market would be a problem,” Kim said. “We should try to make fine adjustments before the realFingerprint Time Attendanceestatepandora beads wholesaleproblem reaches a risky level.”