Construction costs rise amid slump in real estate...the financial deterioration of construction companies

Amid the sluggish real estate market, construction companies' performance is expected to fall sharply due to rising construction costs.

According to a report released by the Korea Institute of Construction Industry, the financial position of construction companies has deteriorated significantly since 2023 due to continuous decline in construction orders, a slump in the real estate market, and rising construction costs.

In particular, the construction cost index in November last year was 130.26, up 29% from November 2020, before the surge in construction costs began.

The Korea Development Institute said that the steep rise in construction costs is making it more difficult for small and medium-sized construction companies to manage, adding that the number of construction companies that reported bankruptcy was 29 last year, the highest in five years.

At the same time, he stressed the need for timely and effective policy implementation to stabilize construction costs more than ever.