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North Korea Will Announce New Real Estate Trading Law Next Year

North Korea Will Announce New Real Estate Trading Law Next Year

Posted December. 15, 2004 22:56,   


North Korea is planning to announce a real estate law that partly allows individuals to sell their houses at will in the first half of next year, said a Beijing-based source Wednesday.

Since there has been an increasing number of illegal house trades among individuals after the North’s “economic adjustment policy” in July 2002, actions to legalize such trading are expected, added the source.

The Background and Actual Condition—

If the North enacts the new house trading law as the source says, the law will come to legally guarantee the individual’s right to houses, which were “actually traded in the manner of sales.” Such an attempt can be interpreted as a move to remove the discrepancy between the existing law and reality.

North Korea’s law has banned the sales of houses owned by the government, but if people can afford them, houses—excluding those of high-ranking officials—can be actually on sale. When an individual builds a house with his or her own money and with government authorization, the individual has ownership of the house and is free to sell it at a high price.

Indeed, actual house trades have been made by changing the holder of the permit to use government-owned houses in North Korea before the 1980s.

Such activities spread nationwide since the food shortages worsened in 1994, and the authority has lost its power over it. People in dire situations have no choice but to sell their houses as a last resort, and those in better conditions have moved to where conditions are better, where then they often build a new house.

North Korean defector Kim (36) said that today, more and more people are able to obtain government approval and build their own houses with their own money. This is not only because government-owned houses are relatively small, but also that if they get caught trading them, their houses could be forfeited.

“Those from regulation offices always find fault with rich people and take bribes, but they usually let poor people pass,” added Kim.

However, it is not clear yet if a new law will allow an individual to pay the government to buy the right to use a house.

A Signal for Extended Privatization?—

The primary goal of the North Korean government seems to take practical advantage, through legalization, of illegal house trading activities that are currently hard to control.

North Korea has promoted house construction nationwide to activate its economy through construction investment, while pushing forward a large-scale remodeling project in Pyongyang since 2002.

Under such circumstances, the North seems to believe that the project, coupled with the legalization of illegal house trading, would further encourage house trading and stimulate hidden cash flow to float up to the surface.

Meanwhile, it is hard to exclude the possibility that the house trading system might result in more extended privatization rather than an activated economy.

After the economic adjustment policy, North Korea has allowed a central market, taking a step forward towards a market system. The north, though still in a rudimentary stage, the North has clearly moved toward its recognition of privatization.

The North has also launched a de facto private cultivation plan called the “vegetable farm system.” Not only that, more private businesses such as restaurants and service sectors are gradually being allowed. Therefore, the house trading law as well can be interpreted as part of these changes.

“The North had paid attention only to solving food shortage crises after the economic adjustment policy, but by now allowing house trading among individuals, it is clearly undergoing meaningful changes,” said professor Namgung Young of the North Korea Studies Department of the Hankuk University of Foreign Studies.