2023, Vol.33, No.1

Korea Real Estate Review 2023 KCI Impact Factor : 0.56

pISSN : 2092-5395 / eISSN : 2733-8339
https://journal.kci.go.kr/krer

This paper reviews grounds for just compensation and the market value standard in compulsory land acquisition, and then identifies limitations in the Korea’s practices on compensation appraisal. In addition, the actual compensation level in Korea is empirically examined using available data. Results show that the appraisal of land compensation tend to fall short of the level of market-value-based compensation. The main reasons in terms of methods are two-fold. First, compensation is calculated on the basis of Officially Assessed Land Prices (OALP), which is estimated to be 40~50% of observed market price. Second, the compensation amount is set at the ‘past’ and not the ‘current’ market value by excessively excluding development surplus arising from the project to be promoted. As an ultimate remedy, this paper discusses a change in land compensation appraisal method, that utilizes market transaction prices more directly rather than relying on the OALP. As a supplementary measure in the transition period, an institutional framework is recommended to allow active adjustments to the primary compensation appraisal according to circumstances of the target land.

Given the rising inflation at home and abroad, this study analyzes the effects of inflation hedges based on Seoul apartment assets to represent domestic economic entities. Unlike previous literature, the present study particularly carries out an empirical analysis by using the SVAR model with five variables, assuming that the inflation hedge effects of real estate assets may vary depending on the causes of inflation. The demand-pull inflation analysis shows that prices and Seoul apartment prices move in the same direction for the rising interest rates, and that Seoul apartment assets have effects of inflation hedges. However, cost-push inflation shows that prices and Seoul apartment prices move in opposite directions, and Seoul apartment assets have no effects of inflation hedges. These findings result from the causes of inflation because, in terms of cost-push inflation, prices may show downward rigidity or even increase if the structural problem of aggregate supply is not resolved, apart from the aggregate demand policy following the base rate hike. This scenario is regarded to reduce the effects of an inflation hedge on real estate assets.

In Korea, the housing market is undergoing a period of rapid price increases, and a policy to prevent false price reporting is implemented as a stabilization strategy. However, research on the relationship between false price reporting and market distortions in the real estate industry remains lacking. This study aims to empirically estimate whether false reporting of real estate price cause market distortions. Specifically, the prices of canceled trade suspected of false reporting and of normal trade are compared by using the data of Real Estate Trade Management System (RTMS) apartment sales in Seoul, Korea from Feb. 2020 to Dec. 2021. Double-adjustment in Propensity Score Matching is combined with Coarsened Exact Matching to obtain an accurate comparison. For the two groups of prices, pairs with similar attributes such as transaction time, location, apartment area, floor, and building age are matched. Results show no significant price difference between the two groups. False reporting of housing prices may have occurred in the specific period and region with high transaction cancelations, but its effects are negligible and cannot be concluded as a cause of market distortions.