Real estate brokers have popped up in North Korea to take advantage of the rapid increase in illegal private home purchases and sales in the communist nation as people scramble to secure shelter amid an early cold spell, sources inside the country said.
Individual citizens who are forbidden by law to buy or sell houses on their own must rely on the brokers because they are connected to regional housing management departments and judicial authorities, they said.
Most of the buyers are North Korea's nouveau riche who have earned money through their positions as Workers' Party officials.
In Chongjin, capital of North Hamgyong province, there are two brokers—Mr. Park from the Sunam area and Mr. Choi from the Pohang area—who provide real estate services to buyers, said a source from the province who requested anonymity.
The brokers compile lists of people who put houses up for sale in expensive areas and pressure them to use their services to sell the properties, he said.
The brokers usually make commissions of 20-30 percent on each transaction, he said.
Others involved in the real estate business are mostly unemployed people or ex-convicts who are closely related to law enforcement authorities, the source said.
Now an early unexpected cold snap is pushing up demand for private homes, the source said.
“The demand for private homes has increased because of the recent unexpected cold,” he told RFA’s Korean Service.
Despite some major construction projects, including private homes, which are under way in North Hamgyong province, the housing shortage for North Korean residents remains the same, he said.
“Home prices have risen due to the housing shortage, and real estate brokers have appeared,” he said.
Bribe republic
Although buying and selling homes is illegal in North Korea where all housing is controlled by a housing management department under each regional people’s committee, those who want to purchase a home usually pay brokers bribes to expedite residence registration and moving procedures, said another source from North Hamgyong province.
Brokers’ threatening insistence that home sellers use their services force the sellers to lower their asking prices, which allows the brokers to make more money on top of their commissions, he said. Those who resist their demand have difficulties trying to sell their houses.
“The brokers are closely connected to authorities, so people with money use the brokers for housing transactions,” he said.
The Sinam area of Chongjin, which prospered for many years thanks to its fishing industry, fell victim to a recession years ago, and housing prices there fell, he said. But prices for homes in the Sunam neighborhood have risen significantly for several years because the city’s largest market is located there.
“The newly constructed apartment building in front of [former leader] Kim Il Sung’s statue in the Pohang [area of Chongjin] cost about $20,000, [but]private houses in Sunam cost more than $50,000,” the source said.
Written by Jieun Kim for RFA’s Korean Service. Translated by Soo Min Jo. Written in English by Roseanne Gerin.