An imbalance in the demand and supply of urban land has been followed by land price increase and cyclical land speculation. To address the chronic imbalance between the demand and supply of urban land, the government decided to supply 3,000㎢ of urban land by the year of 2020. Toward this end, the government eased land use regulations on farm land, mountainous areas, greenbelt areas, and military facilities protection districts amounting to 2,719㎢ in 2008. This policy is based on the premise that land prices will be stabilized when developable land increases following the land use deregulation.
To analyze empirically the impacts of land use deregulation on land prices, this study carried out conventional econometrics model analysis and dynamic system dynamics analysis.
The provisional conclusion of the empirical analyses can be summarized as follows: First, although land use deregulation has an impact on land price stability, the effect on the total land market is quite limited contrary to general expectations. Note, however, that higher land price stabilization effect is noted in the Seoul Metropolitan Area where land demand is relatively higher and land regulation is relatively stricter. As such, land use deregulation limited to some regions may be more effective than applying it nationwide. Second, the prices of land targeted for deregulation rise because deregulation is accompanied by the use conversion of the relevant land. This implies that a land market stabilization policy should be simultaneously implemented along with the deregulation. Third, shortening the urban land supply period was more effective for land market stabilization rather than deregulation itself. Accordingly, effort at the policy level to simplify complex administrative procedures further along with land use deregulation is necessary.