A Study on the Method for the Classification of Homogeneous Land Price Areas*

Abstract

The Official Announcement System of Land Price involves the announcement of the Reference Prices of 500,000 standard lots among a total of 32 million lots across the nation, followed by the assessment of the land prices of individual lots based on the Reference Prices of standard lots and the land price index table. Although it has been twenty five years since the introduction of the system, several problems still remain regarding the unequal distribution of standard lots, the imbalance between Announced Reference Prices and assessed individual lot prices and among assessed individual lot prices. Dividing lands into homogeneous land price areas (HLPAs) has previously been proposed; however, implementation of the method was difficult due to the difficulty in determining the proper spatial boundaries of the homogeneous price area. This study aims to propose a method for and examine the validity and effectiveness of utilizing computers to classify HLPAs, categorizing into the same group lands of the same usage and the same land-use zone within the same administrative area, regardless of the spatial proximity of lands. The result shows that it is possible to classify HLPAs in a prompt and consistent manner, and to sub-classify the price layers according to the regional land price distribution, fitting the characteristics of each region. This study demonstrates that the proposed method can enhance efficiency in allocating and distributing standard lots, while restoring the balance between the standard lot price and assessed individual lot prices, and among assessed individual lot prices. It also shows that the systematic utilization of market prices allows assessed land prices to be closer to the market price.