Gyeonggi-do, Maintenance of 1,488 Houses with 'Land > Land + Housing' Price Reversal

[Asia Economy (Suwon) = Reporter Lee Young-gyu] Gyeonggi Province has rectified 1,488 "price reversal phenomenon houses," where the individual housing price (land + house) is more than twice lower than the individual publicly announced land price (land) for the first time nationwide.

To improve the unreasonable real estate public price system, Gyeonggi Province conducted a full survey and rectification from September 1 to November 15 on 1,488 houses among a total of 148,824 houses where the individual housing price, which combines land and house, was lower than the individual publicly announced land price reflecting only the land, with a reversal difference of more than twice.

The individual publicly announced land price and individual housing price are standard prices used for a total of 68 administrative purposes such as taxation and welfare, determined and announced by the mayor, county governor, or district head based on the prices of standard land and standard houses selected annually by the Minister of Land, Infrastructure and Transport.

Until now, cases of price reversal phenomenon have been pointed out as one of the main factors undermining the reliability of publicly announced prices and causing distrust in administration. The price reversal phenomenon mainly occurs in mixed-use buildings located in commercial areas because the individual housing price is calculated based on standard houses from other areas when there are no standard houses nearby.

In fact, as of January 1 this year, the individual housing price (land + house) of B house in A city was announced as 31.2 million KRW, while the individual publicly announced land price (land) was 138.99 million KRW (702,000 KRW per 1㎡), showing that the land price alone was more than four times higher than the combined land and building price. This was because A city calculated the individual housing price based on C house (158,000 KRW per 1㎡) in another area with a relatively low publicly announced land price, due to the absence of an appropriate standard house near B house.

Additionally, the province confirmed some cases where the city or county calculating the individual housing price failed to properly reflect changes in housing characteristics due to development. For example, in the case of houses located in restricted development zones, if the area was changed from forest land to residential land long ago but the individual housing price was still calculated based on forest land as the standard, the publicly announced land price would be higher than the individual housing price.

This rectification was carried out through on-site investigations by the province’s appraisers and individual housing officers, along with consultations with city and county officials to present opinions.

Among the 1,488 houses, the province adjusted the standard house price for 732 houses. For 718 houses, the standard house was replaced or added, and for 38 houses, housing characteristics were modified.

A provincial official stated, "The comprehensive rectification of the price reversal phenomenon was promoted as a means to secure the reliability of publicly announced prices and to ensure fairness in various administrative tasks such as taxation and welfare. We will also promote comprehensive rectification for houses with a reversal ratio below 100% in the future to ensure that publicly announced prices are appropriately disclosed."

Meanwhile, the province has continuously proposed improvements to the central government for the real estate public announcement system to resolve institutional problems of individual housing prices, including ▲delegation of individual real estate mapping and supervision authority to provincial governors ▲integrated operation of individual real estate (land + house) public announcement schedules ▲requests for correction of characteristic mismatches in standard real estate ▲additional selection of standard houses.