Korea’s mid-size builders have been dogged by severe financial problems due to a prolonged slump in the local housing market, a trade association said Tuesday.

Over a quarter of the top 100 local builders, including LIG E&C Co., were put under a workout program or court receivership as of Tuesday, according to the Construction Association of Korea.

The biggest reason for their cash shortages is a protracted slump in the local property market that started since the onset of the 2008 financial crisis, the association said.

Only 1,333 new homes were sold in January, accounting for 8 percent of the comparable figure a year ago, according to the Korea Housing Association.

Also responsible for their credit crunch is the fact that the builders are too focused on apartments, unlike the top 10 local builders that have diversified business portfolios from engineering to industrial plants, an industry source said.

In addition, a fall in orders from the public sector made the mid-sized builders’ financial situation grim, CAK said.

Total orders from the public sector came to 38.24 trillion won ($34.1 billion) in 2010, down 34.6 percent from the previous year. 

The number of builders that went belly-up last year stood at 306, up 26.9 percent from 241 in 2009, according to CAK. 

(Yonhap News)