Government Failed to Curb Land Speculation

On the 15th, about one thousand people swarmed to 25 plots of land in a public bid held by Korean National Housing Corporation for commercial lands inside the Keum-chon residential land development zone, Paju, Gyeonggi Province. In average, there were 40 bidders for each opening. Several plots even chalked up 250 bidders for each. Bid price surpassed two thousand one per plots, three times more expensive than prior arranged price.

Transactions of nearby lands that belong to private owners, however, almost came to halt. Number of land transactions the Paju municipal office received registration papers in this month is 15, 0.5% of that of the last month (2597 cases).

Critics arose that land transaction permission-required system the Government put into effect this November to prevent speculation failed to draw satisfactory results. Although the government tied up 83% of lands within capital areas including Seoul, Inchon, Kyunggi and so on to the permission-required system, residential land development zones, subjects of most land speculations, are exempted from the system.

In particular, because of the fact that the Government manages the residential land development zones, unfairness of the system in regard to private lands is being harshly criticized.

According to Korea Land Corporation and real estate companies on November 27, 158plots of lands among 198 of single housing lands in Jukjeon District, Yongin, Gyeonggi Province was changed their holder. In vicinal Dongcheon Distirct, 21 among 38 piji of lands were transferred to new owners. 99 among 172 piji of lands in Hopyung, Pyungnai District, Namyangjoo were resold. In this month, seven pilji of lands have already greeted new owners in Hopyong and Pyungnai District.

Lee, Joo Hyun, President of Prime Real Estate located in Jukjeon, Yongin, said “70-pyong land used to be sold two hundred and million won beforehand added two hundred million won to its price merely in terms of premium,” and “as the lands are exempted from the permission-required system, transactions are steadily occurring.”

Illegal transactions are prevailing in recent days. ‘Settler residential land application rights (so called Takji)’ in expectant Dongtan New City district, Hwasung, Kyunggi being sold. Premium of the application right to the lands reaches to 13 to 14 hundred and million won.

The settler residential land application right is supposed to be given to the original resident of lands to offer them right to have the developed land in advance, and thus, transaction of the land itself is illegal. But illegal transactions are easy to be seen, because once the lands are on sale, nominal transfers are allowed. A real estate company person criticized, “The development zone, one of the most speculation-expected areas due to their good positions, is free to transact, but private lands around the areas are tied up by Government.”

In regard to the matter, Ministry of Construction and Transportation stressed that its policy is that only non-city planning district would be tied up to the permission-required system, and so the residential development lands should be excluded.

Lee, Jae-yong, Chief of Land Policy Department of the Minsitry said “the residential development lands are city-planning districts and are exempted from the permission-required system,” and “if they should be included to the system, then apartment complexes in Gangnam should be too.”

Ki-Jeong Ko koh@donga.com