By Lee Hyo-sik
Staff Reporter
Land prices here fell last year for the first time in 10 years, as individuals and businesses refrained from purchasing properties amid the global liquidity crunch and economic downturn, with many trying to dispose of holdings for cash.
Home prices also declined last year on a lack of buying interests, but apartments in affluent southern Seoul have begun showing signs of a recovery in recent weeks on large-scale development projects and the government's easing of real estate regulations.
According to the Ministry of Land, Transport and Maritime Affairs Friday, land prices nationwide dropped 0.31 percent in 2008 from a year earlier, the first decrease since 1998, when land value declined 13.6 percent following the Asian financial crisis.
Seoul suffered the steepest price decline last year, as its land value fell 1 percent from 2007, while prices of land in North Jeolla Province rose 2.58 percent thanks to the designation of its largest port city, Gunsan, as a new free economic zone. Also, the construction of Hyundai Heavy Industries' new dockyard also boosted property value there.
In December alone, prices fell 2.72 percent across the nation, with Seoul, Incheon and Gyeonggi Province suffering steeper declines than provincial areas. Land prices in Incheon went down 3.74 percent, followed by 3.48 percent in Seoul and 3.13 percent in Gyeonggi Province.
Not only land prices have declined. Home values nationwide recorded another year of decline in 2008 due to a lack of buying interests against ample supply.
However, Seoul apartment prices, particularly those in Gangnam, Seocho and Songpa districts, have shown signs of upward movement in recent weeks, boosted by large construction projects in the areas and government deregulation of the property market.
According to Property 114, a real estate information provider, apartment prices in Seoul edged up an average of 0.05 percent in the third week of January from the week before.
In southern Seoul, a highly speculative zone where some of the most expensive apartments are located, properties saw a 0.71 percent week-on-week jump in value. Prices had plummeted more than 0.5 percent per week since last summer up to December.
Analysts say the government's deregulation of the residential reconstruction sector, low interest rates and hopes of easing anti-speculative measures in Gangnam are the driving force behind the modest rebound.
They also say Seoul City's plan to lift regulations on building high rises along the Han River and the government's approval of Lotte Group's 555-meter skyscraper in Jamsil increased nearby apartment prices.
But analysts caution that the price jump could be short-lived as macroeconomic conditions ― industrial production, consumption, investment, employment ― will further deteriorate down the road, projecting home prices in southern Seoul will likely resume a descent for quite some time.