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Persistence and Heterogeneity of Residuals in Officially Assessed Commercial Land Prices: Dynamic Analysis of a Standard-Lot-Based Mass Appraisal System

  • Korea Real Estate Review
  • 2026, 36(3), pp.81~95
  • DOI : 10.35136/krer.36.3.4
  • Publisher : korea real estate research institute
  • Research Area : Social Science > Law > Law of Special Parts > Law of Real Estate
  • Received : June 24, 2026
  • Accepted : September 18, 2026
  • Published : September 30, 2026

Kim, Da Hoon 1

1한국지방세연구원

Accredited

ABSTRACT

In Korea, a legal basis for a non-residential real estate price disclosure system has been established; however, the system has yet to be implemented. Moreover, despite the integrated nature of land and building values in commercial real estate, land values are still estimated indirectly using officially assessed standard land prices and the Land Price Comparison Table. Focusing on Korea, this study consolidates transaction parcels for commercial and mixed-use residential properties in seven major metropolitan cities at the unique-parcel level. These parcels are combined with officially assessed land-price data for 2015–2024, yielding an unbalanced panel of 19,084 parcels and 186,948 parcel-year observations. Residuals in officially assessed land prices are derived from out-of-sample predictions generated through five-fold parcel-level group cross-validation, with all annual observations for each parcel assigned to the same validation fold. AR(1) specifications are estimated using the difference generalized method of moments, revealing positive persistence of approximately 0.72–0.78; however, no single specification satisfies both the serial correlation and overidentification tests simultaneously. The heterogeneity analysis indicates that positive residuals are less persistent than negative residuals, while persistence generally increases with the level of officially assessed land prices and the maximum permitted floor area ratio . In contrast, the contemporaneous spatial lag is not statistically significant. These findings suggest that residuals in officially assessed land prices recur over time within the same parcel; nevertheless, caution is warranted when interpreting any specific coefficient as a precise adjustment rate. From a policy perspective, a parcel-level dynamic quality-control indicator could be developed by accounting for both the magnitude and recurrence of residuals.

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