Prices of houses traded on North Korea’s black market are dropping precariously, causing panic among dwellers, according to sources inside the country.
Houses in impoverished North Korea are fully owned by the government and trading on them is forbidden. But some dwellers “sell” their homes illegally with the approval of corrupt officials to cash in on the acute shortage of homes.
Sources in provinces along North Korea’s border with China told RFA’s Korean Service that the value of their home transactions had fallen by as high as 85 percent from last summer.
“Housing prices in Gilju-gun, North Hamgyong province, dropped to around U.S. $500 from what was U.S. $3,300 last summer,” a source from the province told RFA’s Korean Service on condition of anonymity.
He said that in North Hamgyong’s Cheongjin city, the trading price for a two-bedroom home had plummeted to around U.S. $3,300 from U.S. $8,300 in the summer last year, and yet no buyers were showing any interest.
Another source from Yanggang said housing prices in his province had been similarly affected in the last several months.
“I was barely able to afford my house near the Yalu River [separating North Korea from China] at around U.S. $3,300 early last year,” he said, also speaking on condition of anonymity.
“The trading price of my house, which was still U.S. $3,300 in August last year, has now dropped to about U.S. $990.”
The Yanggang source said the housing crash began in the fall in the capital Pyongyang and had led to widespread unease because the cause of the depreciation remained unknown.
He added that it was impossible to guess how far prices would drop.
Other sources said that the market crash had led to increased tension in the affected areas.
“A person who bought a home in Hyesan city, Yanggang province, was involved in a dispute with the seller as he wanted to cancel his contract [when the home began to lose value] and suffered a bad head injury during a fight,” a second Yanggang-based source said.
“He was hospitalized at the Hyesan University Hospital for two weeks, but remains in a coma.”
A second source in North Hamgyong province said that housing prices appeared to be linked to North Korea’s local unofficial marketplaces, or “jangmadang.”
“The overall cost of products at the jangmadang also declined around the middle of last month while house prices were falling,” the source said, adding that “a recent brouhaha was linked to merchants complaining about the severe losses they had incurred.”
“In recent years, the housing prices and prices at the jangmadang had [simultaneously] skyrocketed … I think the increasing prices of houses slowed demand for housing and led to the housing price collapse.”
In North Korea, private ownership of homes is illegal but sources have said it is no longer strange to hear about “sales” of government properties between individuals.
Based on trading on the virtual housing market, the country’s most expensive homes are located in Sinuiju, with Hyesan city in northern Yanggang province next in cost and Pyongyang in third.
A single family home or large apartment in what is deemed a good location in Sinuiju was known to fetch around U.S. $30,000 as recently as May last year, while those in the suburbs of Pyongyang and other border cities are priced less.
While houses are being built every day in Pyongyang to supply a growing demand, it is difficult to find new homes in other cities, leading to a rise in the cost of real estate.
Homes in cities near the border with China command the highest prices on the black market because they provide access to Chinese money and infrastructure, like mobile phone signals.
Sources told RFA that the North Korean government has warned that the practice of housing transactions is an “offense against the system of North Korea.”
But attempts to stamp out the trend have repeatedly failed as those involved in the sales include untouchable high-ranking officials and because the practice is too far-reaching.
Reported by Sung-hui Moon for RFA’s Korean Service. Translated by Doeun Han. Written in English by Joshua Lipes.