Land Prices Recover to Pre-Global Crisis Levels

Boosted by economic recovery, the announced prices for multi-unit houses in Korea have risen about five percent from last year, recovering to their prior levels.

In particular, the prices of houses that saw a huge drop last year and expensive houses costing 600 million won (523,560 U.S. dollars) or higher rose more than 10 percent, the property taxes on certain apartments are expected to rise up to 30 percent.

The Land, Transportation and Maritime Affairs Ministry said yesterday it will announce the prices of 9.99 million multi-unit homes including apartments, row houses and multi-family units in Korea on its homepage (www.mltm.go.kr) and at civil affairs department of city and district offices from March 5 through 26.

The Korea Appraisal Board estimates the prices based on the real transaction prices and survey data of real estate agencies and information agents. The prices will become the tax base of property taxes, including those for comprehensive property and wealth.

The announced prices of Korea’s multi-unit homes rose 4.9 percent on average from last year, when it dropped 4.6 percent in the wake of the global financial crisis. The ministry said, “Announced prices have recovered to the level of 2008 thanks to economic recovery, increased liquidity, expectations of deregulation on old apartments to be rebuilt, and future development plans in certain areas.”

Regions that saw a rise in the prices included Seoul (6.9 percent), Busan (5.5 percent), Daejeon (5.4 percent), South Gyeongsang Province (5.1 percent), and Gyeonggi Province (4.1 percent). Daegu, however, saw a drop of 0.01 percent.

High-end houses costing between 600 million (523,360 dollars) and 900 million won (785,340 dollars) witnessed the biggest price increase of 10.2 percent from last year. The prices of houses costing more than 900 million won (785,340 dollars) rose 8.8 percent.

In general, owners of multi-unit homes will bear a bigger tax burden this year, especially those in the affluent Gangnam area of Seoul, where a huge hike in property tax is expected given that announced prices have risen more than 20 percent.

The number of homes costing more than 900 million won (785,340 dollars) has increased from around 60,000 units last year to 85,000 this year.

jarrett@donga.com