(From Joongang Daily)
By Kim Hee-Jin, Ha Nam-Hyun
Land prices in Korea have skyrocketed nearly 3,000 times since the 1960s, according to data released by the central bank on Monday.
Average land prices surged to 58,325 won ($50) per pyeong (35.5 square feet) in 2013, from 19.6 won in 1964 – an increase of 297,500 percent, the Bank of Korea estimated.
During the same period, the country’s nominal gross domestic product expanded 1,933 times, the report said.
The land price-to-GDP ratio was about 392 percent on average for the half-century. The peak was 597 percent in 1991, followed by 547 percent in 1970. The latest ratio from 2013 was also higher than the average, at 409 percent.
“Land values spiked before and after 1970, when the government was pushing several development projects such as the Gyeongbu [Seoul-Busan] Expressway,” said Jo Tae-hyeong, a senior BOK official. “The so-called ‘three-low phenomena’ – low interest rates, cheap oil prices and weakened greenback against the Japanese yen – also boosted land prices in 1991.”
The phenomena helped the export-driven Korean economy, as its competitor Japan was struggling with the strong yen against the U.S. dollar at the time. Low interest rates and cheaper oil prices also saved costs on importing oil and the lending rates for foreign debts. The improved economy pushed up overall values in the country’s property as a result.
As the government pushed forward with the state-run constructions, the ratio of the state-owned properties also rose to 36.5 percent in 2013 from 21.8 percent, the report showed.
Out of the total value of land in the country, the value of the government’s land accounted for 26.1 percent, growing from 13.2 percent during the period.
“As the government increased the state-owned social infrastructure, such as railways and roads, it has bought more land that was relatively cheaper than others,” Jo said.