South Korea’s land prices fell last month, the first decline in eight years, as demand for property weakened amid a global economic slowdown.
The average price fell 1.4 percent last month from October, the first decline since 2000, the Ministry of Land, Transport and Maritime Affairs said yesterday in a statement on its Web site.
South Korea’s real-estate industry, which accounts for about 20 percent of the economy, is reeling after the backlog of unsold homes reached the highest level in more than a decade. Land prices in Seoul slid 2.7 percent last month, extending the previous month’s 0.2 percent drop, according to the statement.
Residential-land prices in urban areas fell 1.8 percent last month from the previous month, while commercial-property prices declined 1.6 percent, the ministry said.
Meanwhile, South Korea may allow pension funds, financial institutions and home developers to create real estate investment trusts (REITs) to help construction companies by acquiring unsold homes.
The government is also considering tax breaks for pension funds and other companies that invest in the REITs, the Ministry of Land, Transport and Maritime said in a statement yesterday.
Financial institutions in South Korea have agreed to extend the maturity of loans by a year to aid some cash-strapped construction companies as the number of unsold homes reach the highest level in more than a decade. The global financial crisis has dried up funds, making it more difficult for consumers to get loans to buy new homes and for builders to refinance debt.