Real estate is a very important part of general economy of a nation and closely connected with other parts of economy. It is also major property to both individuals and countries.
Due to the peculiar character of real estate, various factors interact...
Real estate is a very important part of general economy of a nation and closely connected with other parts of economy. It is also major property to both individuals and countries.
Due to the peculiar character of real estate, various factors interact effecting changes in prices of real estate. The factors involve prices of commodities, interest rate, money supply, income level, business conditions, changes in rules and regulations, and social and environmental factors.
When interaction of these factors results in stabilization of land prices, national economy is stabilized as well. On the contrary, as history has proven, a sharp rise in land prices imposes a heavy burden on national economy. In this regard, this study attempted to identify the factors that affect land prices in an effort to contribute to the stabilization of land prices. Among the numerous factors this paper focused on macroeconomic indicators.
The study was conducted on two levels; on national level and local level. It analyzed correlation between changes in land prices and macroeconomic indicators of both Korea as a whole and Taegu. Ultimately this study is to help make policies for land price stability.
Total money supply increasing rate, consumer's price of rising rate, GNP increasing rate, economic growth rate were selected for national indicators while gross local product increasing rate, real local economic growth rate, consumer's price rising rate, building licensing rate were chosen for local indicators. It also surveyed the development of changes in land prices of Taegu and the nation.
The results of the nationwide research are as follows.
First, changes in land prices had periodicity of ten years.
Second, macroeconomic indicators including economic growth rate, total money supply increasing rate, GNP increasing rate, consummer's price rising rate showed positive correlation with land price increasing rate.
Third, money supply had the closest correlation with the change in land prices followed by GNP, economic growth rate.
Whereas the results of the local level research are as follows.
First, as for the fluctuation of land price index, industrial land prices fluctuate more than residential land prices. Fluctuation of residential land prices is almost consistent with that of general land prices of Taegu. Therefore the development of changes in land prices of Taegu can be understood by reviewing changes in residential land prices.
Second, macroeconomic indicators including economic growth rate, nominal gross local product increasing rate, building licensing rate showed positive correlation with land price increasing rate.
Third, nominal gross local product increasing rate had the closest correlation with changes in land prices.