[The Economics of Taming Housing Prices] Let’s Reimagine Farmland as Green Cities

Korea’s cities are extremely cramped. Housing prices and land prices are also higher than in almost any other country. Unless one is very wealthy, it is impossible even to dream of living in a detached suburban home in the city, as people do in advanced Western countries. Not only in large cities such as Seoul, Busan, and Daegu, but even in smaller cities like Samcheok, people live in concrete jungles.

This is not because Koreans are especially prone to speculation, nor because the country lacks land. It is because, despite land being spread out all around us, we have tied our own hands with regulations that prevent us from using it. Even though low-priced farmland lies idle, it cannot be converted into highly valuable residential land. As a result, urban housing prices have soared through the roof, and cities have become surrounded on all sides by concrete forests without even a single park.

Of Korea’s entire national territory, less than 6% is used for urban purposes such as residential land, commercial sites, school grounds, factory sites, roads, and railways. The remaining 94% consists of farmland and forest land. If only one-fifth of that farmland and forest land were converted to urban use, the amount of usable space would quadruple. The price of urban land, with supply overflowing, would fall by more than half. Even then, farmland and forest land would still account for as much as 75% of the country’s total territory.

Especially in light of the market opening now approaching before our eyes, converting farmland that is being used with little value into urban land is an even more important task. Some worry that if farmland decreases, food security will be threatened. But in this age of globalization, there is no need to worry that we will be unable to buy food from abroad. There is no reason for us to go to war with food-exporting countries, and unlike oil, food prices are very difficult to cartelize. The proof can be seen in Hong Kong and Singapore. In these two countries, which do no farming at all, there has not been a single case over the past several decades in which collusion among food-exporting countries caused a problem. On the contrary, the reality is that their citizens receive abundant and delicious food from around the world at prices even lower than ours.

Rather than preserving farmland by subsidizing it with taxpayers’ money, it is a wiser policy in many respects to transform that land into beautiful green cities. Rather than tying farmers to their land through farmland regulations, lifting those regulations would benefit the farmers themselves as well. Now is the time to embark on a project to recreate farmland and forest land as beautiful cities.

Original title: [집값잡기의 경제학 ] 농지를 녹색 도시로 재창조하자

Author: Center for Free Enterprise (CFE)

Date: 2006-12-14

Source: https://www.cfe.org/bbs/bbsDetail.php?cid=column&pn=20&idx=10686