Land Transaction Cliff... 27% Decrease in Q1 Trading Volume

Land transaction volume in the first quarter of this year sharply declined by about 27% compared to last year. This is attributed to investment sentiment cooling due to fatigue from land prices having risen to high levels and the difficulty in acquiring farmland following amendments to the Farmland Act.

According to the Ministry of Land, Infrastructure and Transport on the 22nd, the total land transactions (including land attached to buildings) in the first quarter of 2022 amounted to approximately 618,000 parcels (476.6㎢), a 19.3% (about 148,000 parcels) decrease compared to the previous quarter (about 766,000 parcels). Compared to the first quarter of 2021 (about 846,000 parcels), it decreased by 26.9% (about 228,000 parcels). Pure land transactions excluding land attached to buildings were about 264,000 parcels (444.3㎢), down 17.6% from the previous quarter and 16.4% compared to the first quarter of 2021.

The rate of land price increase also appears to be slowing. Nationwide land prices rose by 0.91% in the first quarter of 2022, down 0.12 percentage points from 1.03% in the fourth quarter of last year and 0.05 percentage points from 0.96% in the first quarter of 2021. Both the Seoul metropolitan area (1.17% → 1.01%) and other regions (0.78% → 0.72%) saw a reduced rate of increase compared to the previous quarter. Within the metropolitan area, Seoul (1.28% → 1.08%), Gyeonggi (1.06% → 0.96%), and Incheon (1.06% → 0.90%) all experienced a decrease in growth rates.

In recent years, land prices nationwide surged rapidly due to a real estate market boom and various development issues, but transaction volumes and prices have entered a correction phase around events such as the presidential election. In particular, the amendment to the Farmland Act in July last year is seen as having dampened land investment sentiment. Shin Tae-su, CEO of the land information platform Jijeon, stated, "The amendment to the Farmland Act stipulates strict post-management to prevent speculative demand inflow," adding, "As a result, investment sentiment has frozen, leading to a sharp drop in transaction volume."

However, with the new government’s inauguration, development issues are being reemphasized, and there is a considerable possibility of fluctuations in the land market. Especially, due to the creation of the 3rd New Towns, the amount of land compensation released into the market this year is expected to reach 32 trillion won. If this massive land compensation flows into the real estate market, it could stimulate the market again. CEO Shin said, "In particular, if the compensation released in the metropolitan area is reinvested, it could have a significant impact on the recently stabilized metropolitan real estate market."

This content was produced with the assistance of AI translation services.