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Construction permits for new homes surge 11 pct in June

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(Globalpost/GlobalPost)

SEJONG, July 17 (Yonhap) -- The number of permits for new home construction surged 11 percent from a year earlier last month, the government said Thursday, but slowed sales indicate a possible oversupply in the local home market.

According to the Ministry of Land, Infrastructure and Transport, the number of construction permits for new homes came to 42,427 in June, compared with 38,208 issued in the same month last year.

The figure marked the sixth consecutive monthly rise.

The increase stood out in rural areas with a 12.4 percent jump on year to 24,312.

Permits issued in Seoul and its surrounding capital area grew 9.3 percent on-year to 18,115.

By type, permits for the construction of new apartment units spiked 49.7 percent to 29,874 units while those for other housing units, such as detached houses, plunged 31.2 percent to 12,553 units.

Although the growth in the number of permits may indicate a recovery in the construction market, it may be masking an oversupply of new houses that could drive down home prices and cause a downturn in the overall real estate market in the long run.

In the first six months of the year, the number of construction permits for new homes came to 219,963, up 22 percent from the same period last year, with the number of new homes built also surging 16 percent on-year to 200,704 over the cited period.

However, the number of new homes sold only came to 146,953.

Market observers say the number of permits for new housing units will likely reach 500,000 this year, significantly higher than the government's earlier estimate of 374,000.

The government earlier had said it will limit the number of new home construction permits to about 390,000 this year to prop up real estate prices and encourage more investment in the housing market.

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